WhiteWave (NYSE:WWAV) -- a spinoff company of Dean Foods better known by its products including Silk, International Delight, Land O'Lakes, and Horizon Organic -- has performed incredibly since 2010, and it continues to grow.
In this video segment, Chris Hill, Jason Moser, and Taylor Muckerman talk about what sets WhiteWave apart from other food companies, and they share some general insights on when you should consider investing in this industry.
A full transcript follows the video.
Chris Hill: A pretty good third quarter for WhiteWave, the packaged-food company. Shares are up about 4% or 5% today. You looked at this one, you liked this one.
Jason Moser: Sure. Yeah, investors out there are like, "White what?"
Taylor Muckerman: I had no idea.
Hill: WhiteWave. It's not exactly a household name.
Moser: I understand, I mean. But you would know this company by names like Silk and International Delight and Horizon Organic. Big focus on plant-based foods. This is a business, though, that spun off from Dean Foods back in July of 2013. And they've actually doubled sales since 2010. So it's performed very well. I think the reason why investors wouldn't want to look at businesses like these is because these are the types of businesses that aren't limited to just one channel of distribution. So we're talking about groceries and food and stuff like that.
You look at Whole Foods, for example. I think Whole Foods is a great business. We like it. You look at Kroger, Publix, whatever, those stores are all great, but you're investing in that one real entity right there, whereas if you were looking at WhiteWave or Hain Celestial, or any of these kinds of businesses, they're getting their products out to all those distribution channels. And so, that's really the advantages there. WhiteWave has a number of different ways they distribute that food out there -- Wal-Mart, Costco, Trader Joe's, Whole Foods, Publix, Kroger, all of these stores carry that WhiteWave stuff. So that, to me, makes it a bit more attractive, when you're looking at the space.
They acquired a company called Earthbound Farm in 2013, which, they're responsible for organic salads and packaged fruits and vegetables. You see a lot of that stuff in Trader Joe's, for example. But yeah, I've been looking at it for a while. I tapped it in CAPS, actually, right after the spinoff, because it felt like those are opportunities, typically, when the market is not quite sure how to assign value.
The shares have doubled since the end of 2013. So it's performed very well. It's not a stock that is cheap, by any traditional metric today. But again, it's a high-quality company that continues to perform very well. And again, because they're not beholden to just one channel of distribution, they have a lot of options, which is nice.
Hill: I didn't realize they also own Land O'Lakes Butter.
Hill: Which, once the weather turns cold, that's when I start doing a lot of baking, 'cause it results in food I like to eat, and it also warms up the house.
Muckerman: Put it in the toaster, yeah.
Moser: I mean, that's another good point. They're gonna continue --
Hill: Butter consumption going up in my house over the next six months.
Moser: They're gonna bring a lot of those little bolt-on acquisitions to grow that portfolio brands out as time goes on. So again, I think this is a business, like Hain and WhiteWave, this is where you'll see some more consolidation, in, I think, the little mom-and-pop brand operations are attracted to being part of something bigger. So, yeah, I suspect they'll continue to do very well. I'd typically rather find a business like this in the middle of a crisis ... say, perhaps an E.coli crisis, Chris. You know? I mean, there are E.coli crises in the world today. I'm not mentioning any names ...
Hill: Certainly in the Pacific Northwest, for a particular burrito company.
Jason Moser has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Costco Wholesale, Hain Celestial, Wells Fargo, and WhiteWave Foods. The Motley Fool has the following options: short January 2016 $52 puts on Wells Fargo. 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.