- As growth slows down, investors panic and sell stocks of good companies which can create a value opportunity.
- Conventional food retailers are entering the organics market increasing general competition.
- It all boils down to valuation and fundamentals.
Organic food stocks have been very rewarding to investors who understood the trend from the beginning.
High margins and a growing customer base has attracted many competitors, squeezing margins, lowering comparable sales, limiting growth and affecting profits. Such a situation is especially bad for growth stocks because as their growth slows down, the high valuations are no longer justified. The consequence is a sharp decline in stock prices as the first estimate misses arrive and guidance becomes more conservative. More →