10 Best Organic and Healthy Food Stocks and ETFs To Buy In 2022

Organic foods avoid toxic chemicals, growth hormones, and GMOs, helping reduce your exposure to toxic pesticides and promoting nature-friendly farming practices. Read on to learn about some of the best ways to invest in this trend.

David Dierking   Updated May 15th, 2022

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Are organic and healthy food stocks good investments?

What started as a niche market segment has grown into a full-scale industry of its own. Over time, consumers have become increasingly aware of the harmful effects that chemicals and pesticides can have on our bodies. A recent report found that 70% of non-organic produce still has traces of pesticides when it arrives at the grocery store. According to some studies, exposure to these chemicals can result in nervous and respiratory system disorders and even cancer.

The organic and health food industry is growing fast. In 2005, organic food sales in the United States were around $13 billion. In 2020, that number grew to more than $56 billion. One research report suggests that the market may approach $100 billion by 2027.

Plus, the growth trend in organic food is accelerating. In 2020, sales grew by 13%, the first time that organic food sales experienced double-digit growth since 2015. Certified organic food now represents 6% of all food sold in the U.S.

Although the organic food trend now appears to be mainstream, not just a fad, does it make organic food stocks good investments? It really depends on the company. Health food stocks typically trade at higher valuations, and organic produce costs more to grow.

Organics hasn’t necessarily been an easy sell for investors. Janus Henderson managed The Organics ETF (ORG), but it only attracted $6 million in assets. It closed in 2016.

What organic food companies are publicly traded?

There aren’t that many publicly traded organic or health food pure-plays, but you can broaden your options by looking into companies that have organic or health food product lines. One example would be B&G Foods. Most pure-play health food stocks are small caps, so risks are elevated.

Organic food stock and ETF list

  • Hain Celestial Group (HAIN)
  • United Natural Foods (UNFI)
  • SunOpta (STKL)
  • Sprouts Farmers Market (SFM)
  • Natural Grocers by Vitamin Cottage (NGVC)
  • B&G Foods (BGS)
  • Lifeway (LWAY)
  • Global X Health & Wellness ETF (BFIT)
  • Amplify Cleaner Living ETF (DTOX)
  • VanEck Future of Food ETF (YUMY)

Read more about each option.

1. Hain Celestial Group (HAIN)

  • Market capitalization: $2.5 billion
  • 2022 return: -35%

Hain Celestial was formed in 2000 as a result of the merger between Hain Foods and Celestial Seasonings. It offers both food and personal care products, having acquired dozens of health and wellness brands. Its more popular brands include Terra, Earth’s Best, and Avalon Organics.

Like many other consumer companies, Hain has had a tough time due to inflation and supply chain issues. The company recently disappointed in its quarterly earnings report, missing on both the top and bottom lines. Hain expects total revenue growth to be flat in 2022. 

However, they have taken steps to exit 23 unprofitable or sub-scale brands to reduce operational complexity. Hain is now focused on reinvesting in factories, employees and core brands. Time will show if their efforts pay off or not.

2. United Natural Foods (UNFI)

  • Market capitalization: $2.5 billion
  • 2022 return: -14%

Founded in 1976, UNFI is one of the largest wholesale distributors of organic foods in North America. It currently offers more than 5,000 products across 200 categories, including the Nor-Cal, Wild Harvest, Mt. Vikos, and Stone Ridge brands.

The cornerstone of UNFI’s business is its relationship with Whole Foods (now part of Amazon). The company is Whole Foods’ single largest third-party supplier and accounts for one-third of all Whole Foods purchases. In turn, Whole Foods represents nearly 20% of UNFI’s total revenue. That relationship should continue for the foreseeable future. In March, UNFI announced that it extended its contract with Whole Foods up through 2027.

With sales of $27 billion last year, UNFI is easily the largest revenue generator on this list. Its stock has also been one of the better performers given the market sell-off, owing to solid year-over-year revenue growth and product diversity.

3. SunOpta (STKL)

  • Market capitalization: $800 million
  • 2022 return: 1.5%

SunOpta mostly sells plant-based and fruit-based beverages and dairy products, including soy milk and almond milk. The company derives 58% of its revenue from the fruit-based segment of the business. Some of its clients include Whole Foods, Walmart, and Starbucks.

After several acquisitions, the company announced its Value Creation Plan in 2017. The goal was to divest itself of non-core and low-margin businesses and focus on high-value products. Before this, STKL was generating well over $1 billion in revenue but losing more than $100 million a year. As the VCP progressed, revenues shrunk but net income has turned breakeven. 

The company’s shares soared recently on a surprise profit and solid guidance. 

4. Sprouts Farmers Market (SFM)

  • Market capitalization: $2.7 billion
  • 2022 return: -16%

Sprouts is a grocery store chain focused on healthy and organic foods. It offers packaged foods, produce, meat, supplements, and household items. It operates 380 stores in 23 states.

SFM was another victim of the COVID-19 pandemic as consumers stayed out of physical stores and used online grocery shopping options. In 2021, revenues declined 6% and net income fell 15% compared to the year prior. Up until the pandemic, SFM had been growing well and increased revenues by nearly 40% from 2017 to 2021.

The company is back to projecting growth in 2022. It’s expecting to increase revenues by 4-6% and open 15-20 new stores.

5. Natural Grocers by Vitamin Cottage (NGVC)

  • Market capitalization: $422 million
  • 2022 return: 30%

NGVC is a specialty grocer focused on natural and organic foods, body care products, pet care, and dietary supplements. Founded in 1955, the company operates 162 stores in 20 states, mostly in the West of the United States.

NGVC is a company that keeps cranking it out. 2021 was their 18th consecutive year of positive sales growth. Net income for the full year was a record $20.6 million. Income seekers will also appreciate that the company increased its quarterly dividend by 43%. The stock’s forward-looking dividend yield is 2.1%.

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6. B&G Foods (BGS)

  • Market capitalization: $1.7 billion
  • 2022 return: -21%

BGS is a bit of a mash-up of more than 50 different brands, including Crisco, Green Giant, Cream of Wheat, and Ortega. Over a two-decade period ending in the mid-2010s, BGS made more than 20 acquisitions. It owns many traditional pre-packaged brands, but one of its biggest successes is the Green Giant brand, which sells healthy frozen foods like riced vegetables.

That strategy didn’t pay off in 2021 and growth stagnated. Revenues were up 4.5%, but that is due to the company’s acquisition of the Crisco brand. The press release said the company expected to see net revenues of $270 million annually from Crisco. Total revenues for the year were up just $90 million, so revenue would have declined without it.

In addition, net income declined nearly 50% due to a combination of acquisition and impairment charges. The company expects an improvement in 2022, so this can be a turnaround type of investment.

7. Lifeway (LWAY)

  • Market capitalization: $80 million
  • 2022 return: 5%

Note: Lifeway failed to file its annual report on time and Q4 results are unavailable.

LWAY is the organic food company best known for its lineup of kefir products. The kefir market is expected to grow by more than 5% annually over the next five years, and Lifeway is one of the leading manufacturers.

LWAY is a micro-cap company with modest revenues and a small net profit. The more interesting story is what’s going on behind the scenes. Earlier this year, Ludmila Smolyansky, one of the company’s founders, filed a notice with the SEC that she wanted her daughter removed as CEO. 

On top of that, LWAY missed the deadline to file its quarterly earnings and annual report. It’s never a good sign for the health and direction of a company, but some investors like to buy on the cheap, and perhaps there’s an opportunity here. The stock is actually up 5% this year.

8. Global X Health & Wellness ETF (BFIT)

  • Assets: $24 million
  • 2022 return: -25%

If you’re not interested in betting on individual stocks, an ETF that covers the broader industry is an option.

Launched in 2016, BFIT links to the Indxx Global Health & Wellness Thematic Index, which tracks companies that provide products and services promoting physical wellness through active and healthy lifestyles. Organic and natural food is one component, but the index also includes fitness equipment and technology, athletic apparel, and nutritional supplements.

Danone, which has the Evian and Oikos brands, is the fund’s top holding, though it’s the only one resembling an organic food company. BFIT is more of a bet on consumers spending more on healthy lifestyles.

9. Amplify Cleaner Living ETF (DTOX)

  • Assets: $1 million
  • 2022 return: -30%

Launched in mid-2021, DTOX also targets companies benefiting from the cleaner living theme. It’s broad-based, however, and can target healthy food and dining, health and beauty, building and infrastructure, energy, and transportation. Natural Grocers by Vitamin Cottage (NGVC) is the fund’s third largest holding, but with just $1 million in assets, the fund is too thinly traded.

10. VanEck Future of Food ETF (YUMY)

  • Assets: $2 million
  • 2022 return: -18%

Of the three ETFs on this list, YUMY does the best job of focusing on organic and natural food. It targets the agri-business and innovation theme, which includes sustainable agriculture and food products and services. There are several food companies within the portfolio, but not enough to consider it a pure organics play. At $2 million in assets, it runs into the same size issue as DTOX.

There are no good pure plays on organic and natural foods among ETFs, so individual stocks would be the better way to go if you just want to invest in organic food and not healthy living. Since this is such a growing trend, sticking with revenue leaders in the space with diverse product lineups is a smarter strategy.

🔔 Vegan food is another huge trend that picked up during the pandemic. Learn what the top vegan ETFs are.

Author: David Dierking, CFA

David Dierking has been writing about investment strategies using ETFs and mutual funds since 2007. He has extensively contributed to The Street, Investopedia, Seeking Alpha, ETFdb.com, ETF Trends, and ETF Daily News. David received his BA in finance from Michigan State University. He has also been a CFA Charterholder since 2004.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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