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WhiteWave Proves Whole Foods' Results Dead Wrong

Stocks in this article: WWAV WFM BNNY LWAY POST

NEW YORK (TheStreet) -- With its first quarter results, WhiteWave Foods (WWAV) showed Whole Foods Market (WFM) investors that there is still money to be made in the organic beverage and food space.

Shares of Whole Foods are down close to 20% on the week, while WhiteWave's jumped 10% after releasing quarterly results. Shares of WhiteWave are back up near 52-week highs, at the same time that around a third of the population is lactose intolerant. There's another large part of the consumer market that has chosen to simply cut dairy out of their diets. Both are big positives for WhiteWave.

WhiteWave still has a large presence in both almond milk and soy milk. The company owns the soy and almond milk market, having over 25% of the market share for each. Now it's looking to capitalize on the increasing appetite for other natural and organic foods.

Eating healthy is proving to be a very powerful trend. WhiteWave Foods is proving to be the best pure play on this movement market.

There are some key growth areas for the company, the first being the expansion of its Horizon brand. It will soon launch Horizon brand kids' snacks. It has already launched Horizon macaroni and cheese.

Its $600 million acquisition of Earthbound earlier this year gave WhiteWave the brand presence and scale potential to take on the organic foods industry head on. Earthbound currently has a leading position in the organic packaged salad category, owning 45% of the market share. Earthbound plans to expand into the organic bowl salad kits, as well as single serve salad kits.

WhiteWave is also expanding into China. The world's largest country has a very large consumer base. WhiteWave recently inked a joint venture with China's dairy giant Mengniu Dairy. And as the level of income rises in the country, consumers will be able to trade up to organic foods and beverages.

WhiteWave will be making three warehouse expansions this year, along with a new manufacturing facility in North America. This should help lower costs by making the company's supply chain more efficient.

Innovation is still alive and well at WhiteWave. The company is rolling out rice-based creams, as well as new yogurt products. Its Silk brand is also getting a boost, which includes adding protein and fiber almond milk, and an almond-coconut blend. It's in the process of adding of Dunkin' Donuts (DNKN) brands to the coffee creamer category.

WhiteWave still appears to be very compelling from an investment perspective.

WhiteWave trades at 27.5 times next year's earnings estimates. That's still below other companies that in the food industry, including Annie's (BNNY), which trades at a forward P/E of 29.1, Lifeway Foods (LWAY) at 29.3 and Post Holdings (POST) at 30.8.

If you're a believer in the long-term viability of the organic food market, WhiteWave still a buy for long-term investors.

At the time of this article the author did not own shares of any company listed.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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