Recall the phrase "Follow you heart"? Whether it is where to go to school, which job offer to take, or whether to fight for a relationship, conventional wisdom says you should follow your heart. But when it comes to investing, I think it's much wiser to follow your stomach than your heart. It doesn't leave us emotionally attached -- and I, for one, always think better on a full stomach.
What stocks get my belly and my wallet excited?
Chipotle Mexican Grill
Talk about a mouthwatering company both to invest in and eat at. Chipotle's shares are up 369% since the start of 2009, and earnings are up 129% in the last two years. Not only has Chipotle been able to expand stores, it's been able to raise prices at a time when few others could.
The secret? Chipotle is more than just food. It's a feel-good story. Last week the company announced it expects to use 10 million pounds of produce from local farms this year, up from 5 million pounds last year. I'm not sure I could make a full meal with locally grown produce at my local grocery store. And what has me really intrigued is Chipotle's expansion into Asian cuisine. I may never eat anywhere else.
Chipotle's stock is expensive at a 35 times 2012 earnings, but the company pretty consistently beats analyst estimates, so it isn't as pricy as it might look.
Shares of Panera Bread have followed a similarly explosive arc like Chipotle's in the last two years as consumer spending has recovered. The bakery-cafe is expecting to grow earnings 35% to 38% in the second quarter, and sales should increase between 5% and 6% at company-owned stores.
And you can feel good that unsold bakery products are given to local food banks and charities every day. Again like Chipotle, Panera's shares aren't cheap at 24 times 2012 earnings, but with new stores opening regularly, they're worth the price.
If home cooking is more your style, Whole Foods provides natural and organic products to make your meals healthy. Ideals permeate the business model at Whole Foods, and if what you're investing in is just as important as how much money you're making, this stock might be for you.
But don't think Whole Foods isn't going to reward shareholders in the long term. The company has its sights set on 1,000 stores in the U.S., up from around 300 today. That kind of growth, along with a story you can believe in, has made Whole Foods a Motley Fool Stock Advisor pick and one of this Fool's favorites.
More than a stock
The best way to pick a food stock may be to remember what you feel like when you leave the store. I can't remember the last time I left McDonald's
The Motley Fool owns shares of Whole Foods and Chipotle. Motley Fool newsletter services have recommended buying shares of Chipotle, Panera Bread, Whole Foods, and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.