Whole Foods Market  (NASDAQ:WFMI) may be called “Whole Paycheck” by some consumers thanks to the premium prices of its products, but the company’s stock is anything but expensive these days. Between the costly and controversial acquisition of Wild Oats and bizarre message board postings by CEO John Mackey, the stock has certainly fallen out of favor and is currently sitting at its six-year low.

It’s been a rough ride for Whole Foods shareholders over the last two years, but the business itself has a promising future. While the bottom line has been pressured from the integration of Wild Oats, sales have continued growing at a healthy rate. Over the past five years, annualized revenue growth has paced at 21.1%. Even in the midst of a sobering economic environment, quarterly same-store sales have remained positive this year, signaling organic growth at existing stores. This is quite a testament to the Whole Foods' brand and its loyal customer base. In my opinion, that’s a narrow moat.

Overcooked valuation
Sitting at a valuation the company hasn’t seen in at least a decade, the company is selling at just 10.6 times trailing earnings. This valuation is also based on the slim bottom line from the acquisition. Thus, using the earnings per share earned in 2006, prior to the acquisition saga, the normalized P/E is more along the lines of 8. That’s one heck of a bargain for a company that's expected to grow 16% in the next five years.

Have I tempted you to nibble yet?
The numbers only tell half the story here, so for a more in-depth perspective on the business and industry, let’s take a peek at what StockAdvisor subscriber shabong000 recently had to say on our Whole Foods Market discussion board (free trial or subscription required):

Whole Foods is a leader in the Organic Food Industry and the largest Organic Food Grocer. They have been heavily beaten down by the market and are at 5 year lows. The more people care about themselves and their bodies the more people will start to shop healthy. This is not just a fad in my opinion, but a genuine desire to want to live healthier lives. Companies like whole Foods who dedicate their entire business to this and are leaders in the industry with an already sizable market share and are at an advantage to leverage their growth in the US market, Canada and parts of Europe. They have recently cut their dividend program, but this is not such a bad thing considering they can use this money to expand and to pay down debt. They have acquired one of their largest competitors, Wild Oats and are currently digesting that acquisition. Once the stores are fully integrated we should see higher sales and earnings. Higher sales because they will be in more markets for expansion and higher earnings due to lower costs after the stores are integrated. Mature stores have lower costs due to less shrinkage and operating efficiency.

While the acquisition of Wild Oats will benefit the company in the long run, it has been very costly for Whole Foods in the short-term -- even more costly than management expected. shabong000 believes Whole Foods will overcome this short-term obstacle: 

The fear is that this Wild Oats acquisition continues to weigh them down more and more and they continue to lose margin and earnings due to this acquisition. Also, we must remember that Whole Foods is in a very competitive market and margins can be cut into very quickly. In the end it may come down to who has the more efficient supply chain and can operate for less. Since Whole Foods has been dealing exclusively in the Organic market they should have an edge on already having connections and working relationships with suppliers (though I’m just making an assumption on that, I really have no idea).

In the end, I think Whole Foods is poised for a turnaround and for growth. Everyone is running scared right now and I think that now is a great time to take advantage of this company. If they can achieve their growth goals going forward then this is a great buy in price.

The perfect formula
It’s not surprising, then, that just about every grocer is getting in on the action. Safeway (NYSE:SWY) has been expanding its line of O Organics, Kroger (NYSE:KO) runs its own organic line called Naturally Preferred, and SUPERVALU (NYSE:SVU) announced this spring that it was moving into the organics business. Even the largest consumer product corporations are getting in on the action. Kellogg (NYSE:K) owns Kashi, Dean Foods (NYSE:DF) owns the Organic Cow of Vermont, and Kraft (NYSE:KFT) owns Boca Foods and Back to Nature.

There may be rising competition, but this market is huge. According to AC Nielson, consumer demand for organic and natural foods has grown 10% to 15% annually over the past 15 years, across all retail channels. More importantly, Whole Foods is at the heart of the organic mega-trend.

Buying solid businesses with good growth prospects at depressed market prices is a recipe for success in investing, and Whole Foods seems to have all of the right ingredients.

shabong000 is not an employee of the Motley Fool, and his opinion does not necessarily reflect that of the Fool.

Fool contributor and community analyst John Ballard owns no shares in any company mentioned. Whole Foods Market is a Motley Fool Stock Advisor recommendation. The Motley Fool has a disclosure policy