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Jim Cramer: Wealth From Health

Stocks in this article: SFMTFMFWMWFMHAINWMTGISK

Editor's note (Part 2 of 7): The following is text from Jim Cramer's keynote speech at The Deal Economy Event on Dec. 5 at the New York Stock Exchange, New York City. To watch video replays of the event, click here. To read more content from Jim Cramer on Real Money, click here.


NEW YORK (TheStreet) -- Second theme? Companies that keep us healthy. Lots of times we must invest with the future in mind, meaning the future of what younger investors are compelled by and they are all about trying to stay healthy, even more than aging baby boomers.

This sector's become crowded with the recent advent of public companies like Sprouts Farmers Market (SFM), The Fresh Market (TFM) and Fairway (FWM), all of which are giving the primary health and wellness supermarket chain, Whole Foods (WFM), a run for its money. But I think that Fairway and Fresh Market have over-expanded badly and I don't like their prospects at all. Sprouts has done well so far and it's kind of like a public Trader Joe's. But the winner here? It's simple: Hain Celestial (HAIN). It's the dominant natural and organic food purveyor for all of these stores and it is in an endless land grab to snap up the hottest and the best of the lot.

Irwin Simon's Hain is the ultimate arms dealer to all supermarkets trying to catch up with the fastest-growing segment in the pantry. It's a stock that's up 40% from when I spoke about it here last year and I still like it very much, as the earnings, aided by some new killer products and the entry into Wal-Mart (WMT), have exploded and far exceeded anyone's expectations on Wall Street.

For the long haul, I would still go with Whole Foods because I think it can trump all of these other stores with its presentation and relatively inexpensive prices vs. the perception on Wall Street. I think its stock will get a spur when it opens its gigantic Brooklyn store in a few weeks' time, presenting the new look for its next leg of growth.

There's a reporter who hates Hain at Barron's and he's good for a periodic slam job on the company. His hit-man approach coupled with Washington-based swoons have given you multiple opportunities to get into Hain at a discount in the last year. He's not done. Take his articles as terrific entry points into the stock. I suggested here last year that Hain might be taken over by a major food company.

Since that time, I think the rest of the food group has gotten even more desperate to become MORE natural and organic and it would make a ton of sense for Nestle, General Mills (GIS) or Kellogg's (K), all of which are challenged for growth, to snap up Hain for $120 a share, 50% above where it is now but a bargain for them because it would immediately raise their price-to-earnings multiples given the growth acceleration Hain would present all of them once the deal closes.


Click here for Part 1.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the securities mentioned.

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