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Whole Foods Market: A New Year's Resolution

Tickers in this article: WFM
NEW YORK ( TheStreet) -- You may be one of the millions of investors who experienced heartburn and digestive distress waiting for a resolution of the "fiscal cliff." Here's a possible "remedy" worth considering.

Why not go down to your favorite natural foods store and look carefully at the nutritious variety of delicious choices that can help your new year begin on a healthy note. You might even talk to the employees who work there and ask for a tour of all the latest, organic, gluten-free, digestively positive foods and supplements that line their shelves and produce bins.

If you're one of the fortunate people who has a Whole Foods Market (WFM) within driving distance of your home you may want to make that one of your destinations. The stores are culinary wonderlands, and although the price-per-item is "above average" so are the profits for this visionary company.

As you can see on the five-year chart below, the stock's price has come a long way. You can also directly correlate it with the company's trailing 12-month price-to-cash flow.

WFM ChartWFM data by YCharts

As of the quarter which ended on Sept. 30, WFM had year-over-year quarterly earnings growth of almost 50%. Its year-over-year revenue growth for the same quarter spiked 24%. That's what I'm talking about!

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Another big positive for WFM concerns its competition. In short, there is none. Yes, there are some fine locally run, privately-owned natural food stores. But none have the selection and growth model that separates Whole Foods Market from the herd. Plus, WFM is publicly traded and has plans to expand.

You'd be well-served to visit its "delicious" Web site . Scroll down the page and you'll learn so much. Check out the "mission and values" page too. This is an exceptional story!

Now before you get too "hot to trot" about owning shares of WFM, I'd like to serve up a few caveats for discriminating investors to ponder. First, the stock is trading at almost 37 times trailing earnings and 27 times forward (1-year) earnings. Its price-to-earnings-to-growth ratio stands at 1.85, yet its trailing-12-month profit margin is not even 4%.

Analysts have a consensus one-year target price of just under $105. With the price currently above $91 there appears to be some worthwhile upside potential, but please consider using a stealth trailing-stop-loss system to protect both your gains and your downside risk.

The company will report its earnings from the final quarter of 2012 on Feb. 4. Traders may want to buy some shares now and watch WFM up to Feb. 4. If we have some days where the market sells off and the shares trade down to $90 or below you might consider accumulating then.