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TheStreet Open House

Whole Foods Finally Has a Real Competitor

Stocks in this article: WFM NGVC

NEW YORK ( TheStreet) -- Just 45 minutes from my house by car there's a spacious and inviting Whole Foods Market (WFM - Get Report). Frankly, I seldom shop there.

The main reason is because there's a locally owned and operated business in my community that sells only natural and organic food and other supplies. Like WFM, that company has an abundant "bulk" department where I can scoop out just the right amount of organic bran flakes for my breakfast and organic dried tart cherries that make my eyeballs roll back in their sockets with pleasure when I eat them. Plus, my local natural-food store gives me exceptional service with caring employees.

Recently I drove by what used to be an abandoned Mongolian restaurant and noticed it had been leveled and a new building was being erected. It looked spacious and had lots of convenient parking. The sign out front read "Natural Grocers opening May 29." It's right down the road from our locally owned natural-food store.


When I arrived back at my office, I did some research and discovered that this new store is a part of a publicly traded company named Natural Grocers by Vitamin Cottage (NGVC - Get Report). The story of this company's origins reads like a dream come true for a hard-working couple from Golden, Colo. (Yes, the same city where Coors beer is brewed.)

NGVC was built on the premise that consumers should have access to affordable, high-quality foods and dietary supplements, with nutritional guidance to help them support their own health. The family-run store has grown into a successful national chain with locations across Colorado, Texas, Utah, Wyoming, Oklahoma, Missouri, New Mexico, Montana, Kansas, Idaho, Nebraska, Arizona and Oregon. Altogether, the company has 1,800 employees.

A news release about Natural Grocers, which is still managed by the original founding family, is worth reading. You'll learn about the company's culture and what, in my opinion, makes it a viable form of competition to WFM's near-monopoly until now.

It's been a great run for both WFM and NGVC so far. Perhaps that's why the stock market has granted both a very generous forward price-to-earnings ratio for the stock of each company. WFM, with a market cap of almost $15.4 billion, trades at nearly 25 times forward (one-year) earnings. At the moment, it's trading near its 52-week low of $81.55 and pays an 80-cent dividend.

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