Hain Celestial (HAIN) will peak your interest. You already know about Celestial Seasonings, the tea brand. But Hain Celestial is way more than teas, which now accounts for only 6% of sales. The company has dozens of products, just take a look. Management likes to buy other brands that have already been created, then uses its distribution network which includes major chains such as Walmart, Kroger, Safeway & Wegmans, as well as health food stores such as Whole Foods (through distributor United Natural Foods) to push the product on ever-increasing healthy-eating shelf space.
International expansion is where HAIN is really gaining traction. Sales overseas have jumped from around 10% of total sales to around 40% since 2011. That means this stock has solid growth opportiunity.
One Year Chart
HAIN stock is looking healthy too. The only problem is the stock is right where it should be. No sale prices during the last month’s correction. The stock is $106 today, which is up from the $98 it was when I created these charts in Q3. The stock didn’t buckle during the correction, and is right at a 52-week high.
Looking at the earnings, things are rolling right along. But the P/E of 26 is high compared to the Est LTG of 17%. With the stock selling for $106 today, the P/E is 28, which is even higher than August, when this chart was made.
Fair Value
I feel this stock is worth 27 times earnings, and obviously others do too because its selling right-around that now. Upside for 2015 is decent, but HAIN has been upping estimates the last four quarters, so I think 2015 estimates will continue to climb.
Sharek’s Take
Hain Celestial is a good growth stock in the stable Food & Necessities sector. The only issue is the P/E of 28 is high compared to what HAIN can be expected to grow at long-term. In fact, the Earnings Table shows profits are estimated to grow profits 18% and 16% three and four quarters out. I think HAIN will beat that, but I just don’t see this stock going up more than 20% in the next year, and that’s why I hold off.
View the Earnings Table here. View the Profit History here. View the Ten Year Chart here.
