In volatile markets, it's more important than ever to have a decent watchlist (or wish list!) of stocks you can buy at major discounts. Hain Celestial Group (Nasdaq: HAIN) shares reside on my own watchlist for my Rising Star portfolio, but I'm not buying yet.
Hain Celestial is a possible contender for my socially responsible Rising Star portfolio because it's a pure-play provider of natural and organic products. These goods appeal to a growing category of consumer who increasingly eats according to convictions, including animal welfare, environmental concerns, or a distaste for genetically modified ingredients.
Brands in Hain Celestial's portfolio include Celestial Seasonings (obviously), Health Valley, Garden of Eatin', Arrowhead Mills, Avalon Organics, Soy Dream, WestSoy, Spectrum Natural, Linda McCartney, and Imagine Foods.
These goods could easily end up in the cart one pushes through Whole Foods Market (Nasdaq: WFM), which I recently did purchase for my Rising Star portfolio. Still, despite having dropped about 16% since July 1, Hain Celestial shares just aren't cheap enough for me.
Consider Hain Celestial's PEG ratio of 1.78. That's about even or higher than comparable companies with food brand portfolios, like General Mills (NYSE: GIS) at 1.79, or Kraft (NYSE: KFT) at 1.53.
In addition, a plethora of formidable, deep-pocketed companies have brands that directly compete with Hain Celestial's offerings.
You may be familiar with Morningstar Farms, Kashi, and Gardenburger, all of which are owned by Kellogg (NYSE: K). The Seeds of Change brand is owned by privately held M&M Mars. Hain Celestial also competes against major organic product companies that remain family owned, like Amy's Organic.
I don't think Hain Celestial brings anything sufficiently special to the table to make its current price look appetizing. I'm not even swayed by its line of natural and antibiotic-free poultry products called FreeBird -- although that great name deserves an exclamation point at least, if not all caps as well.
If you'd like to keep an eye on Hain Celestial with me, put it on your watchlist. For now, though, I think its shares need to get a whole lot cheaper before they're a truly tasty buy opportunity.
