Natural and organic foods distributor United Natural Foods (NASDAQ:UNFI) continues its uphill track, reaping the benefits of its renewed relationship with grocer Wild Oats Markets (NASDAQ:OATS). Today it reported upbeat profits and nudged its yearly earnings outlook up a tad.

The distributor reported fiscal third-quarter net income that rose 48.4% to $9.2 million, or $0.22 per share, excluding special items. With those special items, which had to do with implementing the relationship with Wild Oats, United Natural Foods reported net income up 49% to $8.6 million, or $0.21 per share. Net revenues rose 23.5% to $449 million. In addition, as Fools, we laud the fact that United Natural Foods included its statement of cash flows with its press announcement, something many companies don't bother to do.

Another point that bears attention is that United Natural Foods continues to improve its operating margins; they have risen to 3.7% from 3.3% in the same period last year.

While much has been made of low-carb diets like Atkins and South Beach, the general trend toward healthier eating can't be ignored. After last quarter's numbers, Fool contributor W.D. Crotty recently posed the question of whether this company, which supplies "supernatural" grocers like Wild Oats and its top competitor, Whole Foods Market (NASDAQ:WFMI), as well as conventional retail channels, is a safer bet than playing into the straight-up grocery concept.

Meanwhile, Whole Foods and Wild Oats have carved a niche as compared to mainstream grocers like Kroger (NYSE:KR), Safeway (NYSE:SWY), and Albertson's (NYSE:ABS), which have struggled in light of heavy competition for their rather generic wares; Winn-Dixie's (NYSE:WIN) been trounced. Whether these stocks currently represent opportunity or a money pit is a valid question.

And of course, United Natural Foods stands to benefit from the good fortunes of customers like Wild Oats and Whole Foods. It's a growing industry, with total sales of natural products having risen 8.1% to $42.8 billion in 2003, according to Natural Foods Merchandiser data. You can't ignore the important baby boomer segment of the population, who may strongly associate healthy eating and natural foods to increased longevity and health. Meanwhile, many of you have probably noticed that even conventional grocers have a growing tendency to stock some organic and natural foods, some even allotting separate aisle space for those products.

Recently, shares of United Natural jumped 7% to $27.06 on the third-quarter news. The stock's trading at 36 times forward earnings, making it sound like a pricey bet. However, if the company can continue to ride the tide of the healthy eating trend -- and if organic and natural foods continue to get a high profile on shopping lists -- it could justify a healthy outlook for the company's shares.

Are you into organic foods? Talk to other Fools about this food niche on the Organic Living discussion board.

Alyce Lomax does not own shares of any of the companies mentioned.