How to Invest in Stocks for Gluten Free Products

Gluten-free food contains no wheat or wheat products.

Gluten-free food contains no wheat or wheat products.

With more consumers looking into healthy eating choices, demand for gluten-free products has risen sharply in recent years. It’s not just the specialty, health food companies taking advantage of the trend, either. Major food producers are getting into what’s predicted to be a $3.4 billion market by 2015, according to a report by CNBC. Grocery chains even create separate gluten-free baking facilities. If you are interested in investing in companies that make or sell gluten-free products, you do your due diligence just as you would with any other stock.

Who’s Selling It

One of the tricks to investing in trendy foods is to look at who’s putting out the most products. For example, you can invest in publicly-traded grocery chains that carry a large selection of healthy alternatives such as gluten-free foods as long as you know who they are. One of the quickest ways to find out is to visit local grocery chains in your area and make a note of who’s stocking the gluten-free stuff. Many traditional grocers carry gluten-free products and trade on the stock market. The same is true of specialty chains such as organic and health food grocers. Gluten-free products are clearly labeled to attract the hordes of consumers looking for the alternatives and will mostly be found in the cereal, dairy and snack-food aisles.

Who's Making It

In addition to retailers that sell gluten-free products, you can also invest in stocks of companies that manufacture gluten-free products. These can range from small cereal or snack companies to Fortune 500 food manufacturers who have their own specialty lines of gluten-free products. Nonprofit celiac disease associations and gluten-free consumer advocate foundations often provide lists of product producers. They promote the companies that produce the gluten-free products to their followers. Check the companies that seem to be popular with gluten-free enthusiasts through the websites of major exchanges such as the NASDAQ and NYSE to find out which ones are publicly traded.

Finding a Grain of Truth

As with any stock, you should research numerous financial metrics before investing in stocks of companies that make or sell gluten-free products. This includes looking over their quarterly returns to see which companies have delivered the highest sales and earnings growth in recent quarters, which ones have outperformed others in terms of meeting analyst expectations and winning market share, and which ones have seen their stock prices trend higher over the last couple of years. You can research companies via their own websites, through documents they have filed with the Securities & Exchange Commission, and through news articles in print publications and on financial websites.

Follow the Leaders

If you are uncomfortable investing in stocks on your own, hire a portfolio manager who is familiar with the food industry and the growth potential of gluten-free products. You can also read analyst reports on the sector as well as financial publications and websites to learn more about trends in the food industry in general and gluten-free products in particular. In addition, the NASDAQ stock quote page has a feature that you can use to find out the general consensus of industry analysts for various stocks. The page shows you where analysts stand on current trends like gluten-free and what kinds of predictions they’re making.

 

About the Author

Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."

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