Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



3 Reasons I'm Adding Whole Foods Market to My Roth IRA

The Pencils IRA Project is dedicated to building a portfolio of promising businesses that can be followed and replicated by both young and new IRA investors. Each holding of the Pencils IRA Project must meet the five pillars of a "megagrower" business -- purpose-driven business, innovative products, visionary leadership, increasing cash-flow production, and strong company culture -- with significant potential to create stakeholder value and substantially beat the market over the long haul.

Whole Foods Market  (NASDAQ: WFM  )  has had a rough go of it lately. Whole Foods shares tumbled nearly 20% earlier this month after the company reported mediocre quarterly results. While the market has lost interest in Whole Foods in the short term, I see tremendous potential for the company to beat the market in the coming years. 

1. Purpose-driven business
Founded in Austin, Texas, in 1980, Whole Foods has long strived to exemplify its motto: Whole Foods, Whole People, Whole Planet. Whole Foods co-founder and co-CEO John Mackey literally wrote the book on conscious capitalism, serving as a key proponent of the notion that a business should include the well-being of all stakeholders -- customers, employees, shareholders, community, environment, suppliers, and so forth -- in its definition of success. Says Mackey: 

We want to improve the health and well-being of everyone on the planet through higher-quality foods and better nutrition, and we can't fulfill this mission unless we are highly profitable. Just as people cannot live without eating, so a business cannot live without profits. But most people don't live to eat, and neither must businesses live just to make profits.

2. Innovative products and services
Today, Whole Foods is the premier national brand when it comes to the offering and selection of high-quality natural and organic foods. With 379 grocery stores in the U.S., Canada, and the U.K. -- each averaging 38,000 square feet in size -- Whole Foods has a big and expanding base to serve an ever-growing demographic of health-conscious consumers.

According to the USDA, U.S. organic-food sales grew 11% in 2012, and a recent report from TechSci Research projects that the organic-foods market will grow at an average annual rate of 14% through 2018. 

With its growing national and global presence, Whole Foods has helped bring organic and natural foods to the mainstream market. The company's decentralized business model encourages innovation and an entrepreneurial spirit, leading to some wild (but oftentimes successful) ideas such as adding bars to some stores. This innovative culture has played a major part in Whole Foods' success and current annual sales of $13.6 billion.

3. Visionary, experienced, involved leadership
Much of Whole Foods' innovative environment owes to the leadership of co-founder and co-CEO John Mackey, who operates with the understanding that purpose inspires people. Fellow co-CEO Walter Robb joined Whole Foods in 1991 and, along with Mackey, is among the top five insider owners. In 2003, Mackey was recognized as the "Entrepreneur of the Year" by Ernst & Young, and in 2011 Businessweek named both Mackey and Robb "Businessperson of the Year."

With a record 114 stores in the company's development pipeline, Mackey and Robb maintain a long-term outlook with Whole Foods. The company now expects a total of 500 stores to be opened by 2017, representing just under 10% annual store growth over the next three years. Management believes the company can open and support 1,200 stores in the U.S. alone. In addition, Mackey and Robb have set the goal for Whole Foods to bring in $25 billion in revenue by 2019. 

Experienced and innovative management with a proven record of delivering results is exactly what I like to see. We get all of this with Mackey, Robb, and the leadership team they have assembled at Whole Foods. 

Foolish final thoughts
Whole Foods has an exceptional leadership team with decades of combined experience in the industry. Whole Foods is leading the way in the growing retail field of organic and natural food, exemplifying a purpose-driven business spearheading innovation. For these three reasons, I am excited to add Whole Foods to the Pencils IRA Project. 

Will this stock be your next multibagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 19, 2014, at 10:22 AM, prevention wrote:

    Whole foods has also committed to being GMO free by 2018. With rising consumer distrust of GMO's this could be winning strategy.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2962644, ~/Articles/ArticleHandler.aspx, 9/1/2015 6:37:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

David Kretzmann

David started investing in stocks when he was 12 years old and has been a Fool ever since. He is a graduate of Berea College and the Motley Fool's Analyst Development Program, serving as an analyst in Rule Breakers and Supernova. Follow David on Twitter @David_Kretzmann.

Today's Market

updated Moments ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 3:59 PM
WFM $32.13 Down -0.63 -1.92%
Whole Foods Market CAPS Rating: ****