Tag - Kr

During its five years of existence, this company's stock has risen 148 percent, while the iShares Dow Jones U.S. Consumer Goods Sector Index Fund (IYK) - of which it is a member - has risen just 6.3 percent.

That outperformance, from a typically slow growth sector, is worth taking a closer look at

With seasonal apples virtually everywhere here in Vermont it's almost impossible not to think about the importance of fresh fruit in our diets. Of course, as an independent investor I spend as much time considering potential ways to profit from the fresh food movement as I do putting together recipes that feature these tasty treats.

I've recently turned my attention toward consumer staples companies that may get a boost from the fresh food movement.

Cruise down the supermarket produce aisles and check out the fruit prices. Whether you're at a Walmart (NYSE: WMT), Safeway (NYSE: SWY) or Kroger (NYSE: KR), value shoppers are likely to notice one thing - bananas are the cheapest fruit on the shelves. They are ridiculously cheap.

Odd as it may sound, water has become a growth market. I’m referring, of course, not to good, old-fashioned tap water, but rather designer flavored waters that are featured prominently on grocery and health food store shelves. The market for flavored water grew 50% annually between 2001 and 2004 (the latest year for which data were available). Industry analysts forecast the flavored water market will grow to $800 million by 2009, from $168 million in 2004, a greater than four-fold rise.

Sales of flavored water and other non-carbonated drinks are expected to surpass soft drink sales by 2010. This is because consumer tastes are shifting away from traditional sugary soft drinks to healthier “New Age” beverages, which include sodas made from “natural” ingredients, fruit juices and fruit drinks, energy and health drinks, ready-to-drink teas, sports drinks and bottled waters. New Age beverages are distinguished from mainstream beverages by less sugar, less carbonation and natural ingredients.

According to Beverage Marketing Corporation, wholesale dollar sales in the New Age beverage segment were approximately $16.9 billion in 2005. Consumer awareness of the health risks of too much sugar, studies evidencing the athletic performance benefits of proper hydration, and a variety of new beverages/serving sizes are fueling robust sales in the New Age beverage category.

The overall U.S. market for packaged beverages is immense, with total sales estimated at $270 billion in 2005. Sales volume grew 6% annually between 2002 and 2005. Carbonated beverage sales were estimated at $66 billion, or 25% of the total beverage market. Following many years of respectable growth and beginning in 1999, carbonated beverages began to post six consecutive years of less than 1% annual growth and then consumption declines. Despite a declining sales trend, the market for carbonated beverages remains significant, in terms of both volume and sales, and market share remains far larger than any other beverage category.

Two companies that will benefit from the popularity of flavored water and other New Age beverages are Reeds, Inc. (OTCBB: REED) and Jones Soda Co. (Nasdaq: JSDA).

The stock price of Retalix Ltd. (Nasdaq: RTLX), which supplies software for retailers, fuel stations and foodservice organizations, has been rising like the price of gasoline at the beginning of a warm summer season.

Since the beginning of the year, its stock has risen 37%, from about $16 at the end of December to around $22 today. On May 21, Retalix announced earnings that handily beat analysts’ expectations, and the stock was pushed up nearly 8% in two days, from $20.80 to $22.40.

But don’t get too excited yet. Those numbers reflect a partial recovery from a dismal 2006. And a closer look at its most recent earnings statement suggests that it still isn’t fully back in the express lane.

Retalix started out as a supplier of software for point-of-sale (POS) systems for retailers. Its software is used in POS platforms from companies such as International Business Machines Corp. (NYSE: IBM) and NCR Corp. (NYSE: NCR), although those companies also compete with Retalix with their own software. The Israel-based company sells products in more than 50 countries, and is operating in over 16,000 grocery stores in the United States and 42,000 worldwide. Its customers include The Kroger Co. (NYSE: KR), Costco Wholesale Corp. (Nasdaq: COST), Super-Sol Ltd. (Israel’s largest grocery retailer) and BP plc’s (NYSE: BP) chain of gas-and-convenience stores.

A couple years ago, Retalix started expanding into other software solutions for its niche markets. It made a couple acquisitions to move into back-office software to help manage inventories, customer relationships and supplier relationships, among other things. A warehouse management system, for example, is more efficient if it can easily synch up inventory numbers as POS terminals record a new sale.

The company is also helping to bring grocers into the Internet age. A Retalix subsidiary, StoreNext Retail Technologies, provides hosted electronic payment systems to independent grocers. In early May, StoreNext announced a collaboration with Earthlink, Inc. (Nasdaq: ELNK) subsidiary New Edge Networks, allowing StoreNext to resell New Edge’s broadband networking and internet services to North American grocery stores.