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InvestorPlace.com reports on the Initial Public Offering (IPO) filed last week by Sprouts Farmers Market, the company owned by Apollo Global Management, and why it seems like a potentially strong growth company.

Here's how the site frames the story:

"As of now, Sprouts has 157 locations in eight states.

"What sets it apart is a small-box format; Sprouts has an average store size of 27,500 square feet. That’s not huge, but still enough room to have a wide assortment of fresh produce, seafood, dairy items, frozen foods, wine and even body care products.

"There are several benefits to such a small-format approach. First of all, it means that lease rates are generally less and allows for more efficiency in terms of moving products, which is critical for perishables. On top of that, a small format is easier to locate in urban centers, where its not easy to find space — just ask a big-box giant like Walmart.

"In terms of the performance, Sprouts has been no slouch either. Last year, net sales came to $2 billion, up 16%, and net income was $19.5 million, which compared to a loss of $27.4 million in 2011. In fact, Sprouts has generated positive comparable store sales for 23 consecutive quarters. In 2012, the growth was about 9.7%.

"Going forward, the growth ramp should continue, especially as consumers look for healthy foods. According to the Nutrition Business Journal, the market should grow at an annual rate of 10% until 2020. The vitamin and supplement market is also expected to show decent growth, with an average rate of 7% during the same period.

"But grocers like Sprout are not just benefiting from the general health movement. Consumers are also looking for locations that provide a better shopping experiences, with easy-to-shop floor plans, open-air atmospheres and more. It also helps to have highly trained employees. Because of such factors, traditional grocers have seen an erosion of market share, which has gone from 73% in 2005 to 67% in 2012."
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