Annie's Homegrown Cooks Up an IPO

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Tom Taulli , InvestorPlace Writer

NEW YORK (InvestorPlace) -- More than 20 years ago, Annie Withey wanted to create a new kind of food company -- one that made products with real ingredients, not chemicals. The result was Annie's Homegrown, and the company has been growing quite nicely.

This week the company filed for an IPO. Lead underwriters include Credit Suisse and JPMorgan. The plan is to issue shares on the New York Stock Exchange with the symbol of BNNY (the company's mascot is Bernie the "Rabbit of Approval").

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Annie's has the No. 1 market positions for natural and organic categories for macaroni and cheese, snack crackers, fruit snacks and graham crackers. It helps that the company has a loyal customer base, but at the same time, Annie's has been aggressive in getting retail distribution. Its 125 products are available across 25,000 locations across the U.S. and Canada. Retail partners include Kroger(KR), Safeway(SWY), Target(TGT) and Wal-Mart(WMT).

Annie's financials have been strong. Sales have grown from $65.6 million in fiscal 2007 to $117.6 million in fiscal 2011, which is an attractive 15.7% compound annual growth rate. Income from operations came to $15.1 million during the past year.

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The growth is likely to continue because of some major trends. From 2000 to 2010, the U.S. natural and organic food market grew at a 12% annual rate -- reaching $40 billion in sales. It's also easier to sell these types of products at premium prices, which attracts retail partners.

With the IPO proceeds, Annie's can continue to innovate and expand its footprint. And in light of the positive market dynamics, it should be able to get lots of interest from investors when it comes public next year.

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Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of All About Short Selling (Link: ) and All About Commodities. Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned stocks.

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