Motley Fool’s “One American Brand” Could Double Within a Few Years

“ONE AMERICAN BRAND POISED TO POWER INTO THE GLOBAL MAINSTREAM!

“Every decade or so, a brand is born in America that goes up like a moon shot and becomes a recognizable symbol all over the world… Brands like Levis… Coca-Cola… Harley-Davidson… Heinz… McDonalds… GE… Budweiser… Disney… Gillette… Pepsi… The Gap… IBM… Wal-Mart… Apple… Nike… Microsoft… Intel… Dell… UPS… Starbucks… FedEx… Amazon… eBay… and Google…”

That’s how this recent ad for the Motley Fool Stock Advisor newsletter opens — and I bet you already know what they say next, right?

Yep, they’ll tell you the name of this “one american brand” … just as soon as you subscribe to their newsletter.

Now, you may or may not want a subscription to Stock Advisor — I kind of like the Fool guys in general, though their buy and hold newsletters have had a tough year. And you can always check out the reviews of their newsletters on the Stock Gumshoe Reviews service.

But really, if all you want is the name of this company … you’re already in the right place. We can figger that one out for you, no problem.

First, a bit more of the tease, to whet your appetite:

“Here’s the sweet spot in all this for you: David and Tom are right now recommending ONE STOCK SET TO POWER INTO THE GLOBAL MAINSTREAM… one single investment you can hold in your account for a decade or more and make a killing…

“And you’ll get the name, stock symbol, and full details today.

“To tell you all about it, I have to go back 29 years to 1980. Back to the days of a fitful stock market… and an uncertain future. Sound familiar?

“That’s because the best way to invest TODAY is the same it was in 1980. In fact, the process of building real wealth has been much the same throughout all of the stock market’s history (just ask Warren Buffett).

“I’m talking about identifying a few unique growth businesses poised to dominate their mass markets. And scooping up shares and holding them until the cows come home!”

The ad goes on to list a few examples — Wal-Mart, Nike, and Starbucks — where getting in early on a phenomenal new brand would have allowed you to build a fortune, despite some ups and downs along the way.

“The ONE AMERICAN BRAND POISED TO POWER INTO THE GLOBAL MAINSTREAM I’m about to describe shows remarkable similarities to Wal-Mart, Nike, and Starbucks in their early days. In fact, this business is right now using the same powerful business secrets that launched these global giants.

“Here’s the story…

“This company has built a fantastic brand and is revolutionizing its industry. We project it will continue growing at a steady pace well into the next decade.

“You see, this stock IS A GREAT BUY AS WE SPEAK. More important, we believe it could turn into a ‘forever stock’… a stock like Coca-Cola or Apple or FedEx — a stock you and your family thank your lucky stars you found early on…

“And right now, it’s climbing — just like Wal-Mart did in the 1980s — so the earlier you get in, the better. Have a look…”

OK, now I’m starting to get a taste of deja vu … let’s see what the specific clues about this company are.

“That’s why the ONE AMERICAN BRAND recently made the revolutionary decision NOT to follow an industry practice of simply renting shelf space to the highest bidder. Instead, they’re getting the right products to the right customers by having regional managers decide which products get a test run in stores. Then, only if that product sells well and receives positive customer feedback, will the company make a long-term commitment to carry it…

“The ONE AMERICAN BRAND’S sales jumped 23% in 2004… In 2005, its sales jumped another 22%… In 2006 they jumped 19%. 18% in 2007… and 21% in 2008…

“In fact, for the last 5 fiscal years, the ONE AMERICAN BRAND POISED TO POWER INTO THE GLOBAL MAINSTREAM has produced average sales growth of more than 20%!”

Hmmm … yep, I think I know where this is going. A few more specific clues?

“they’re flat out more profitable than the traditional giants in the industry”

“Their ‘new way of doing things’ has quickly turned them into the world’s largest retailer of the FASTEST-GROWING SEGMENT in their industry.”

“… the ONE AMERICAN BRAND has a small number of stores out there – big cities like San Diego may have only one or two, for instance. And its only international sites so far are in Canada and Great Britain.”

“The ONE AMERICAN BRAND won Fast Company magazine’s ‘Customers First’ award”

“THE ONE AMERICAN BRAND was just named to Fortune’s ‘100 Best Companies to Work For’ for the 12th year in a row!”

OK, that’s got to be enough … right? Indeed, because it turns out that the “One American Brand” is the same exact company these folks have been teasing us about for years.

In fact, while they’re now teasing this as a stock that could double within a few years (it’s at $22.60 now), two years ago they were teasing the exact same stock, using an extremely similar ad, with the promise that it could triple again within a few years. Of course, back then shares were in the $40s.

I didn’t see this ad return to heavy rotation a few months ago, when the shares dipped all the way down to $8 and were perhaps a much more exciting bottom-fishing idea … but yes, they’re still teasing Whole Foods Markets (WFMI).

I first saw this ad back in December of 2006, and wrote about it back in March of 2007, when the New American Super Brand ad campaign was quite new and the Stock Gumshoe was still in diapers. At the time, the shares were pushing a 52-week low in the high-$40s, a price that WFMI shareholders would lust for today.

So this is clearly not a pick that the momentum traders or short term folks would have enjoyed much over the past two years — WFMI hit its high of about $80 way back in January of 2006, and it has been pretty steadily moving down ever since. That doesn’t mean that it’s necessarily a bad pick now of course — it is a dominant retailer in its niche, it is still growing, and some folks argue that they have gotten past the worst of their malaise.

WFMI’s problems were brought on by a few things — the stock price just plain got too high because of wild growth expectations, they had FTC and integration problems with the Wild Oats merger that seem now finally to be getting worked through, and now they have the unenviable position of being a brand that’s widely seen as luxurious and expensive at a time when upper-middle class Americans (their core constituency) are feeling poor and scared.

Whole Foods was a massive success in the early 2000s, with huge sales growth and a building boom in new stores as they pioneered the mass market organic and natural foods space and, in some ways, revolutionized grocery shopping, but now lots of folks think they might have overreached and tried to grow too fast.

Then again, organic and natural foods, and high quality produce, are still in much more abundance at Whole Foods than at most (certainly not all) of their supermarket competitors … and they do have an identifiable brand and niche, and (depending on how you look at it) no direct competitors. So it’s tough to say what the next few years will bring.

I’m a little shocked at the rapid recovery of Whole Foods’ share price — the stock fell off a cliff in November, when all companies that tied together the words “expensive” and “consumer” were sold en masse — but now, with the stock up almost 200% from those recent lows, the shares are trading at a forward estimated PE of 28 and analysts are downgrading them (Morgan Stanley and UBS both issued a downgrades last week, they like the price much better in the low teens … Morningstar thinks it’s fairly valued at $15 but a better buy at $7.50). I still like the company, but I continue to find it hard to love the stock at this price — every time I write about them they seem expensive to me, and that hasn’t yet changed.

Then again, I still shop there quite often, and it’s always full.

So what do you think? Will growth return for Whole Foods, or are they destined to be lapped by the improvements made by other grocers? Will their cash-burning international expansion ever take hold, or are they already saturated in their core markets? Will their new marketing campaigns manage to keep the wholesome image but lose the “expensive” aura, or will folks continue to refer to them as “Whole Wallet?”

And most importantly, is it a good investment here? Let us know what you think with a comment below. And if you’ve ever subscribed to any of the Motley Fool newsletters, click here to share your thoughts on those. Happy Investing!


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32 Comments on "Motley Fool’s “One American Brand” Could Double Within a Few Years"

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Katie Catt
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Katie Catt
May 5, 2009 11:08 am

Whole Foods is dead money…at best

sheeple123jump
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sheeple123jump
May 5, 2009 12:12 pm
good article to talk about…. let’s see, while I’m no expert on stocks yet, I am very aware of what’s happening in the world of collapsing economic times. and you can see te signs of whats happening ….precisely ….on the ground ,at places like supermarkets,…what are people buying,what are they not buying….etc.You can see it when you drive through silicon valley as I do, and see the big name high tech companies….their parking lots only half full… a few years ago they were full. you can even see it while driving to work at rush hour…. the traffic is much… Read more »
James H Saito
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May 5, 2009 12:19 pm

Yes, with the downturn of the economy of this country, anything with the words “Excusive”, “Luxury”, or “Rare”. Will have to be set asside for when the economy improves enough to the point when we can splurge once again on the the things we think we need. Anyone for a new Hummer?

Cindy Nevarez
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May 5, 2009 12:25 pm
Although I am not ready yet to buy the stock, I can comment from a consumer’s perspective as I have shopped at Whole Foods since the early nineties. I believe that they will continue to grow albeit with glitches, because they are pacing the growing societal concerns of serious health issues: Land, water, air and oceans are all poisoned. Food is contaminated, and food-makers continue to lie to consumers. The Medical Industry is rigged. The FDA is a joke. More and more people are realizing that they must take their own health issues into their own hands. People will continue… Read more »
SageNot
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SageNot
May 5, 2009 12:28 pm
Geez Katie, this chart looks pretty lively to Moi. http://finance.yahoo.com/q/ta?s=WFMI&t=1y&l=on&z=m&q=l&p=m50,m200,p&a=m26-12-9,r14,ss&c= I’m also ANA/DSHEA Certified & the amount of Wellness Health programs sprouting up all over Florida (& I’m told the West Coast too) is encouraging to a health nut guy like myself. This stock did get fire-bombed eralier; but the fire is out now, unless you’re waiting until they make an all-time high again. It c/b overbought for now, so either use a tight stop, or wait until the correction is complete, but I’m real confident that better days are coming for alternative health stocks. “We are what we eat,… Read more »
Steven
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Steven
May 5, 2009 2:56 pm

Shoe, Tim Fields (the prolific Tim Fields) is touting a stock for the smart energy grid that he says he would put ALL MY MONEY in this small company. The major player is Excelon in a Boulder, Colo. project. Do you know the company??

Tim
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Tim
May 5, 2009 3:13 pm

Part of the reason for the recent run in price of WFMI and several other business is it has for some reason been impossible to short them with the error message “currently there are no shares of xxxx available for shorting”.

I believe there is some market manipulation going on, where all the available shares are being tied up. Many of these companies are institution owned by around 75% or more, so it makes sense that this could easily be done.

No shares available for shorting HOG, WFMI, WY, BWLD. for the last two weeks. This is from scottrade.

David Dennis
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David Dennis
May 5, 2009 9:41 pm
By the 2/3 mark in the article I guessed it might be Whole Foods. But comparing it with Wal*Mart seems like a bit of a stretch – Wal*Mart is a company whose products anyone can afford. Whole Foods is outrageously expensive compared to the competition, and in my testing was no better tasting than products from a more typical upscale supermarket like Gelson’s in Los Angeles. In South Florida, local market chain Publix has a very nice “Greenwise” market as well as having a scattering of Greenwise products in their mainstream stores. They have a reputation for excellent quality and… Read more »
Derf
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Derf
May 5, 2009 10:15 pm

Wow. The political rants on the forum don’t get as heated as a Whole Foods discussion.

Gadget man
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Gadget man
May 5, 2009 11:56 pm
I bought long time ago and doubled my money. Too expensive to shop there now. Being on Social Security makes you buy local produce in season. Kroger has Lauras beef which is non GMO, organic and is cheaper than Whole Foods. Also, other stores such as Publix is going organic, maybe not in all locations, do not know. With all due respect Gumshoe, not all of us in the income bracket for Whole Foods now. Besides nearest location is 40 miles away. We are having a small garden this year, used to have one every year, became pretty well off… Read more »
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"Ginger"
May 6, 2009 2:17 pm

organic, wholesome, no female hormones milk and food (where are all those manly men?) is worth any price.

Even with bad economic times, what I put in my body comes FIRST! I expect Whole Foods stock to do well. Wish we had one in every town. I have to shop there when out on a trip…and love it!!!!

Brian
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Brian
May 9, 2009 3:58 pm

I enjoyed the organic selections at WFMI. The food was expensive, but I guess the old adage: “You get what you pay for”, When buying up scale market food. My brief time to be within a few city blocks from the Whole Foods store was a real convienance. The stock may follow the niche it has carved out of the super market sector. WFMI may have some more pull-backs in price through this year to any interested investors. Best of Luck! Good Investing

Truthpeeler
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May 9, 2009 4:24 pm

Whole Foods? Nah. If I would hesitate shopping there, I certainly wouldn’t touch the stock. I much prefer Trader Joe’s (great quality and staff and lower prices than WFMI) but it’s not publicly traded 🙁

Sally G
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Sally G
May 10, 2009 2:50 am

I bought WFMI at about $25, as it was sliding downhill (not enough research, irrational purchase), suffered through the downturn, and have been pleased to see it return to my purchase area. What to do now? After reading the annual report, and finding that their business practices seem to be as progressive as their food is organic, I’m hoping it keeps going up. As it pays no dividend, I will probably put in a stop-loss against the possibility of another drop, but hope it doesn’t trigger.

Jamie
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March 27, 2010 2:50 pm

With the economy being as down as it is, I'm surprised more people aren't looking to Aldi's and Big Lots. I know they're both very popular now in my area of Ohio. I'm new to trading, and invested in Big Lots a couple months ago, and watched it climb from 27.91 to about 36 before I sold most of my shares. Last time I looked they were pushing 37.

Jim
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Jim
May 15, 2010 4:22 pm

Could THE ONE AMERICAN BRAND be Costco and not WFMI?

George
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George
June 8, 2010 2:40 pm
This was a dead give away in Motley Fools letter. I unfortunately lost money in WFMI because I was one of those over optimistic investors and bought too high. Fortunately, I got out before things got too desperate. I'm still hoping, after 20 years of waiting, that a WFM will open where I am, but I don't think it's going to happen in my lifetime. They tend to cater to people with open minds and hearts, something of which there is a shortage where I live. There is a lot of money here, but it's because the people are so… Read more »
George
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George
June 8, 2010 3:04 pm
Oh, I forgot to mention that where I live, Wal Mart is king. There are two of those in my town of 100,000 or so, and they recently discontinued many of the vegetarian products I used to buy there cheap. It has forced me to change my eating habits. They only have about 3 items there which I can't find at Target anymore now that they have discontinued products as well. I can't grow anything where I live, because the soil is so bad (red clay) and I have allergies to heat and pollen (I'm an indoor person). I don't… Read more »
Alex
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Alex
May 5, 2009 2:49 pm
As long as people care about what they eat Whole Foods will do well. I gather neither Katie or sheeple actually every shop there. It’s called being a smart shopper. I can go into Whole Foods and stretch my dollar, and provide good food for my family. I’ve been able to pickup stuff on sale there, that is cheaper than GMO mass produced crap at the local grocer. If you keep thinking the way you are now. It’ll just continue to drive the cheap food, gmo industry. It’s certainly what’s been causing a lot of our problems. Lately I’ve just… Read more »
Katie Catt
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Katie Catt
May 5, 2009 5:30 pm

I’m talking about the stock. I know people who way prefer Starbucs coffee to McDonald’s…wonderful for them…I prefer McDonald’s stock to Starbucs and I don’t think it’s financially healthy to have an emotional attachment to a stock, no matter how healthful their product is…Whole Food Markets is dead money for now.

Elissa Stein
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Elissa Stein
May 11, 2009 5:06 pm

How do you know that your local farmers aren’t using genetically modified seeds to grow your local produce?
Monsanto has many lawsuits ( most that it wins) precisely because their seeds blow into the organic farmers fields close by, altering the organic ones and creating non-organic hybrids. Frankly, your opinion of genetically modified foods isn’t on point.
Whole Foods had a great run up.The best thing about great run ups is taking profits off the table.

Raul Neumann
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Raul Neumann
May 5, 2009 7:39 pm

Cyndi is one of those that ” are sold the “safe the earth B.s. and environmental fanatics
Whole foods is mainly for people who eat very small portions of ” grass” oe so called ” healthy food; and those that ( like all liberals) think it is an healthy environment; a few months ago in Chicago, they close one store for rodents running around the food
Have a good day!!

sp1ke0kill3r
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sp1ke0kill3r
May 15, 2010 5:49 pm
Yea Cindy that's why people live longer today than in the past. As more and more suckers like you buy into the everything's poisoned hysteria. Except of course the Store dejur who has managed somehow to get crops that are not watered by the poisoned water or grown in the poisoned land are delivered by gypsies with poison filled hypodermics, don't lie to customers, and think Morgan Spurlock is all cute and cuddley. Cash poor people can be gullible too. The best you can do for them is to tell them just how full of it you really are. Just… Read more »
Katie Catt
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Katie Catt
May 5, 2009 8:30 pm

Then by all means put your money where your emotions are

Katie Catt
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Katie Catt
May 5, 2009 8:42 pm
And is being a health nut skewing your investing dollars? The fact is people are looking for value not chic at the present time…just as starbucks has turned coffee into a commodity (as a consumer end product and not just at ICE) so too has Whole Food Mkts turned “organic produce” into a commodity. More and more chains are adding “locally grown” organics to their product line…and even cash strapped…downsize fearing, hybrid driving Yuppies are taking notice of that fact… moreover, the internet rants of a Whole Foods CEO, when they were trying to acquire a competitor hoisted a red… Read more »
sp1ke0kill3r
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sp1ke0kill3r
May 15, 2010 5:53 pm

You must "eat, drink & inhale" a lot of weenies then.

SageNot
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SageNot
May 5, 2009 9:09 pm

Porter Stansberry’s PSIA has EXC since 2002. He’s up 164& incl. dividends & right now it’s his top winner.

SageNot
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SageNot
May 5, 2009 9:20 pm
Emotions, you’ve got t/b kidding young lady. How old are you? I spent the last 8yrs of my 19yr Wall St. career in commodities mgmt & as a swing trader. I’m 99% TA, NEVER, BUT NEVER emotional. Starbucks sucks everywhere except here in Brevard County, Fla. Not one Starbucks outlet has closed up, & the waistlines of many Brevardians are growing. High paying jobs, well to do retirees & of course 1,000’s of military, both active & inactive must love the product, I prefer Seattle’s best when I can get it. I live 10min. from Patrick AFB, who are constantly… Read more »
Katie Catt
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Katie Catt
May 5, 2009 10:00 pm

As you admit you live in an atypical part of the country…and your environment may influence your investment criteria

Gravity Switch
Admin
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May 6, 2009 10:08 am
True enough, I suppose — and that’s part of the image that Whole Foods is fighting pretty aggressively right now. It’s much the same fight that Starbucks is in — they’re perceived as super expensive, but the Mcdonald’s McCafe around the corner from my house here has prices that are only about 5% lower than Starbucks. The challenge is keeping the “high quality” image while also marketing your stuff based on competitive pricing, and the marketers must come to work with headaches every morning. I find that Whole Foods’ produce and dairy stuff that I usually buy is actually the… Read more »
Katie Catt
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Katie Catt
May 6, 2009 2:53 pm
YIKES!!! Mr Gumshoe, I am not and I suspect others who are making arguements against THE STOCK of Whole Foods Market are not, necessarily disputing what you say. However, lets compare THIS STOCK, with the stock of another company, that has sorta, kinda, a somewhat high-end image, to wit: Panera Bread. That stock hasn’t nosed-dived off it’s high like Whole foods has. Moreover, on April 29, 2009, Merill-Lynch downgraded WFMI to underweight and expects it to underperform all year. You might say …and I might agree that analysists ratings of stocks can be suspect, wrong or even corrupt…but none the… Read more »
Gravity Switch
Admin
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May 6, 2009 3:20 pm
I don’t necessarily disagree with you (though it amazes me that Whole Foods stirred up so much emotion from so many folks) — as I think I noted, I wouldn’t buy the stock right here, but that’s because I think it’s awfully expensive. WFMI is still priced as a stupendous growth stock, and I think it’s a long way from proving that it can regain that status in the near future. I’d personally put this in the “great company, overpriced stock” category right now … though I must say, if I’d been paying attention back when it bottomed around $8… Read more »
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