This article is part of our Rising Stars Portfolio series.

Whole Foods Market (Nasdaq: WFM) is one pricey grocery stock. But that dizzying valuation simply reflects its potential for impressive growth yet to come.

I purchased Whole Foods Market shares for my Rising Star portfolio in May for many reasons. Even though Whole Foods is a nationally known retailer, its market is far from saturated. As of February 2011, Whole Foods has only 302 stores in the U.S., Canada, and the U.K. 

Compare that store count to other major grocers, and you'll get the picture. At the end of 2010, Safeway (NYSE: SWY) operated 1,694 stores. Kroger's (NYSE: KR) got an even bigger footprint, with 2,460 stores as of this past January. SUPERVALU (NYSE: SVU) is another grocery monster, with 2,394 stores.

Earlier in its history, it was tempting to think that Whole Foods might not be able to expand much; its wares could have represented too much of a niche market. But years of continued consumer interest in natural, organic, and gourmet foods have made investors realize that this grocery retailer has a long way to go before it reaches maturity. Whole Foods now leads a "niche" that's moved into the mainstream.

Along those lines, co-CEO Walter Robb recently touted the incredible opportunities ahead of Whole Foods at the Jefferies 2011 Global Consumer Conference. According to Robb, the company aims for 1,000 stores in the far-off future, including 35 in Canada, where the grocery company currently only operates six locations.

Even though the greater economy continues to stumble, Whole Foods can still grow shrewdly. It recently shed the last of its debt, and it's now generating free cash flow. That's a great position for any company, however turbulent the marketplace. This retailer also recently showed that its healthy, high-quality wares can defy the ugly consumer spending environment. In May, Whole Foods' second-quarter revenue increased 11.8%, while same-store sales surged 7.8%.

Whole Foods now trades at 38 times earnings. That does sound steep when compared to many peers like those noted above. However, given Whole Foods' cornucopia of potential growth, that premium price may prove astonishingly reasonable as the future plays out.

Alyce Lomax owns shares of Whole Foods in her personal portfolio. The Motley Fool owns shares of SUPERVALU and Whole Foods. Motley Fool newsletter services have recommended buying shares of Whole Foods, and buying calls in SUPERVALU. 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.