Heres My Favorite Stock For 2015

Chances are you're looking for that next great stock to hold in 2015. Finding it can be quite challenging, even stressful given the many different choices that are available. Thankfully, Motley Fool contributing analysts have a few ideas of their own, and have explained why Dean Foods and WhiteWave Foods might be top stocks in 2015.

Rich Duprey (Dean Foods): You could say the U.S. has become lactose intolerant. Americans don't drink milk as much as they did 10 years ago, let alone how much they consumed 40 years ago, and that's a concern for the nation's biggest dairy processor, Dean Foods.

The USDA says the average American drank over 30 gallons of milk annually in 1970. Today it's down to just over 20 gallons. Nor does it help that milk prices are at record levels. The price of a gallon of whole milk hit $3.77 in October, a new record that was 1% higher than its price in September and 9% above what it was in 2013.

Dean Foods, however, surprised Wall Street last month with earnings easily beating expectations. After adjusting for one-time items and discontinued operations, the dairy processor reported a $0.03 per share loss, dramatically lower than the $0.13 per share loss analysts anticipated. Revenues of $2.37 billion also came in above the $2.36 billion Wall Street was looking for.

Milk's higher costs caused Dean Food to lower its full-year guidance in August, but a program of cost-savings and price hikes are already paying off. Since 2012 Dean has closed 12 production plants, or 15% of its facilities, and also raised the price on a gallon of milk by $0.30 to offset its own higher costs. That combination reduced the impact from the 1% drop in fluid milk sales volumes.

While volumes fell here at home, higher demand in Asia caused domestic prices to soar, and Dean was unable to pass along the full costs to consumers. Although that pinched profits this year, it remains a transient issue and raw milk prices are expected to fall significantly in 2015 as greater domestic production creates increased supplies.

Having already engaged in right-sizing its business, there may not be any crying over spilled milk at Dean Foods next year.

Tamara Walsh (WhiteWave Foods): I'm most excited about WhiteWave Foods stock heading into the New Year. If you're not familiar with the name, you likely know their products. Some of the company's top brands include Silk soymilk and almond milk, Land-o-Lakes butter, and International Delight coffee creamers. The stock has enjoyed a nice run this year, with shares of the packaged foods maker up nearly 49% year-to-date. Nevertheless, WhiteWave is still in the early stages of its growth story, particularly because of its massive opportunity in China.

WhiteWave currently generates the majority of its revenue within the United States. However, that is about to change thanks to a strategic partnership in the world's largest consumer market. WhiteWave teamed up with one of China's largest dairy producers, Mengniu Dairy, about two years ago. Moreover, the company plans to begin manufacturing and selling its products in China in early 2015.

Therefore, WhiteWave Foods' 49% stake in the venture should translate into meaningful sales growth for the company in the year ahead as Chinese consumers become more familiar with WhiteWave's growing portfolio of brands. Ultimately, this should be a boon for the company's international sales in 2015 as China boasts over 1.3 billion consumers and a rapidly growing middle class today.

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Rich Duprey owns shares of Dean Foods Company and WhiteWave Foods. Tamara Rutter owns shares of WhiteWave Foods. The Motley Fool recommends WhiteWave Foods. The Motley Fool owns shares of WhiteWave Foods. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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