How to Invest in Natural Food Companies

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Whether you want to profit from increasing public interest in natural foods or you simply appreciate organic and natural products and want to support the companies that provide them, learning how to invest in natural food companies is wise. Luckily, there are numerous natural food producers and grocery stores on the stock market and several ways to invest in them. Before you make any decisions, though, be sure you understand the ins and outs of investing in this growing industry.

Things You'll Need

  • Investment capital
  • Financial data on natural food companies

Decide how much you can afford to invest. Don’t assume you can’t lose money just because the natural food industry is growing and fulfills a basic need. Green investing is still somewhat higher in risk than other investment styles, so take extra care not to invest more than you can afford to lose.

Prioritize your concerns. Natural food companies provide valuable products, but not all are as noble as they seem. Remember that natural food is not always organic, and companies are not always fair trade, or socially and environmentally responsible. Before you look for companies to invest in, get clear on what other aspects of the company’s ethics are important to you.

Research natural food companies. Once you know how much you can invest and know what’s important to you in a natural food company, look for companies to invest in. Start with the manufacturers and grocery store chains you already buy from. Consider their stock performance over time, and read recent news about the company. Short-list at least 10 companies you believe would make good investments.

Buy stocks directly. If you have a broker, ask him about buying stock in companies like Archer Daniels Midland Co., Galaxy Nutritional Foods, Whole Foods Market and United Natural Foods, Inc. These offer natural, organic and/or vegan foods. If you don’t have a broker and have less than $100 to invest, look into Dividend Reinvestment Plans (DRPs) and Direct Stock Purchase Plans (DSPs). These allow you to buy stocks directly from a company and avoid broker fees.

Invest in a mutual fund that includes natural food companies. A mutual fund allows you spread your investment over a number of companies to minimize risk. This is a good choice if you want to invest $250 or more. To make sure at least some of your money goes into natural foods, consider green mutual funds like Green Century, New Alternatives and Spectra Green.

Tips & Warnings

  • Typically, only large companies offer DRPs, so they're hard to find among niche natural food manufacturers. While the Kellogg Company doesn't produce natural foods exclusively, it does offer a line of these foods and has a DRP available.
  • Before you invest a large amount, speak with a financial advisor who's familiar with green or environmentally responsible investing. The average broker or financial advisor may be unfamiliar with certain aspects of this type of investing

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