The management team, led by CEO John Foraker, estimates the company's current penetration of its target market at 6.3%, or 7 million households, and says this has the potential to triple over the next decade. These days, company is headquartered in Berkeley, Calif., and Annie herself is no longer involved in the company on a daily basis. She primarily runs her organic farm now, though she continues to write the notes that appear on the back of each product box and to handle most of the letters sent in from consumers.

In any case, while the market opportunity is vast here, the biggest risk for the firm is the supplier and customer concentration. United Natural Foods ( UNFI) is its largest distributor, and it represents more than one-quarter of all sales volume. Target ( TGT) and Costco ( COST), meanwhile, are its largest retailers, and together they represent 24% of total sales. As penetration into more national retailers continues expanding, this risk should certainly subside.
Jon Markman is editor of the independent investment newsletter The Daily Advantage. At the time of publication, Markman had no positions in the stocks mentioned.

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