With the S&P 500 oscillating around the psychologically important 2,000 level, I remain cautiously optimistic about the market’s outlook. In this uncertain environment, I’m looking to go long growth stocks that are outperforming the broader market.  

#-ad_banner-#One stock that has grabbed my attention is Whole Foods Market (NASDAQ: WFM). Since their October low near $36, shares have surged about 44%. In comparison, the S&P 500 has advanced about 12% during this period.

You wouldn’t think the launch of a new grocery store would be the talk of the town. But recently, when Whole Foods opened its first store in Ottawa, Ontario, the capital of my native Canada, social media feeds blew up. Customers raved about the selection of natural and organic food options.

The Ottawa launch augers well for the planned expansion of the chain’s presence in Canada. At present, Whole Foods has only 10 Canadian stores. But the Austin, Texas-based grocer plans to open at least 40 more Canadian locations in the coming years — a strategy it believes will add an additional $1 billion in annual sales. The company generated more than $14 billion in revenue in the past 12 months.

That annual sales figure is pretty impressive when you consider the company went public in 1992 when its 12 stores brought in $92 million in annual sales. That’s a compound annual growth rate of more than 24%.

Today, the natural foods supermarket chain has nearly 400 stores, most of them in the United States and U.K. It is opening about 30 stores a year, and longer term, management projects it could have as many as 1,200 stores in the U.S. alone.

The chain’s rapid expansion is driven by increasing demand for natural foods. In 2010, the organic foods market was worth about $57.2 billion. Five years later, it brings in about $104.5 billion. With more people learning more about the benefits of “clean eating” and GMO-free foods, this trend is likely to continue.

In addition to the strong growth outlook, the chart is bullish: 

In October 2013, WFM hit an all-time high above $65, up from less than $5 a share in 2008. Unable to sustain this peak, shares gradually retreated. A major downtrend line formed, and WFM ultimately sank to a low near $36 in mid-2014.

The stock probed the support area near $36 three times in the second half of 2014 — in June, July and October — but the bears were not able to push it lower. This formed a highly bullish “W”-shaped bottom. From there, a steep uptrend began to form.

In early November, shares made a big push higher and broke $47.50, a level that marked failed support in April 2014 and also served as key resistance in early 2013. The stock hovered near this support level for the remainder of the year.

So far in 2015, shares have been climbing a very steep uptrend line, gaining 4.6% year to date while the S&P 500 struggles to stay in the black.

The first key resistance is near $59, a pivot point of support and resistance in late 2013, so shares have room to run. 

Buying now and selling into resistance, traders could make 12% returns. The steep uptrend line intersects near $49, giving us a clear exit point and yielding a roughly 2:1 reward-to-risk ratio on the trade.

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Whole Foods is scheduled to report its fiscal first-quarter results on Feb. 11. Analysts are looking for a 10% year-over-year sales increase to $4.7 billion and for a 7% boost in earnings to $0.45 per share. 

For the fiscal 2015 year, ending in September, analysts project revenue will jump 11% to $15.7 billion, translating into a 10% increase in per-share profits to $1.72. 

Given the bullish technical and fundamental growth outlook, I plan to go long on the organic grocery chain.

Risks to consider: While the appetite for healthy, organic food is growing, so too is the competition. Whole Foods’ main competitor, Sprouts Farmers Market (NASDAQ: SFM) could potentially take a bite out of the customer base. 

However, Whole Foods’ management believes its diverse array of products will keep customers coming back — despite availability of similar but lower-quality options at competing stores. The chain’s history of sales growth leads me to believe management’s assessment is correct.

Recommended Trade Setup:

— Buy WFM at the market price
— Set stop-loss at $49.49
— Set price target at $58.90 for a potential 12% gain by mid-2015

This article originally appeared on ProfitableTrading.com: Ride This Niche Stock’s Steep Uptrend to Double-Digit Gains​