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(Editor's Note: This article covers micro-cap stocks. Please be aware of the risks associated with these stocks.)

Let's face it, we all have to eat, and food companies offer a degree of safety on that premise alone. They usually are defensive, low-beta stocks that tend to show reasonable resilience in adverse market conditions. They typically pay a dividend and present modest price to earnings, sales, and equity multiples. The following three companies all offer favorable reward-to-risk ratios, and should be considered by the conservative investor. After all, in these volatile times, it's all about capital preservation, giving the investor the ability to fight another day.

Bridgford Foods (NASDAQ:BRID): I have featured this company many times before. It is closely held, has no debt and a growing relationship with Wal-Mart (NYSE:WMT). Its management is quite focused, because they have plenty of skin in the game with an 80% ownership position. Management is so cost conscious, that at its last shareholders meeting, a run on snack meat samples by overzealous shareholders (I was one of the culprits) resulted in the company rethinking its policy on future shareholder samples. Now that's what I call watching the store!

Although the food manufacturer's second quarter 10-Q showed a 4.6% rise in sales to $28.6 million, a 190 basis point increase in SG&A costs (from 31.8% to 33.7%) offset most of those top line gains. To add insult to injury, BRID experienced a 140 basis point reduction in gross profit margin (from 35.6% to 34.2%) which literally played havoc on the bottom line (dropping it from 11 cents to 1 cent). The good news for potential investors, is that the shares are near the bottom of their two-year trading range, and the company's input prices have begun to trend lower.

Safeway (NYSE:SWY): The grocery store operator is way undervalued. In fact, the shares are now trading lower than before SWY announced it was selling its Canadian division for a whopping $5.8 billion in cash. The outrageous thing about this proposed sale, is that it represents more than SWY's entire market cap of just $5.4 billion. SWY plans on using the $4 billion in proceeds (after taxes and costs) to reduce debt by $2 billion and buy back $2 billion worth of its own shares.

Wall Street has been extra hard on SWY because of its high debt load and pension obligations, yet does not seem to give it much credit for the 738 out of its 1641 locations, where the supermarket chain owns both the ground and buildings. Its real estate assets do not end there -- it also owns 32 manufacturing plants, and 16 distribution centers. It's safe to say that SWY is a real estate-rich enterprise. In addition, its foreign presence is not being entirely eliminated by its exit from Canada, as it will still retain a 50% ownership stake in its 195-unit Mexican grocery unit.

The company just raised its cash dividend 20%, resulting in a more than generous 3.5% yield. Add in the fact that the grocer still owns $1 billion worth of its recent spin-off of Blackhawk Network Holdings (NASDAQ:HAWK), and "voila," you have quite a compelling investment. On the day the Canadian deal was announced, the shares actually soared to $30 in extended hours trading, and I see no reason why the stock won't trade there again, very soon.

Coffee Holdings (NASDAQ:JVA): The coffee purveyor has been gaining some traction with its largest single customer, Green Mountain Coffee Roasters (NASDAQ:GMCR) while simultaneously transitioning out of its high volume/low margin green coffee operations into lower volume, higher margin branded sales. A recent launch of a new product line featuring 100% Arabica whole beans is encouraging. In addition, the company's push into China with its "Don Manuel" brand of Colombian coffees is encouraging. Management has called the Chinese market "untapped and highly viable."

The company's most recent earnings report was disappointing to say the least, but the stock was way over punished, with nearly a 25% implosion. I look at this sell-off as a prime contrarian buying opportunity. JVA's balance sheet is pristine. It has no debt and it is selling at just 1.5 times shareholder's equity. Its short interest of 847,000 shares is staggering, considering the company only has 6.37 million shares outstanding, so there is always the possibility of a wicked short squeeze occurring.

Conclusion: Will you be around to fight another day? Buying value/defensive food stocks increases your ability to do so, because they present less risk. The rewards are obviously not as glamorous as other sectors (it's more like the tortoise versus the hare), but the ability to sleep better at night is priceless.

Source: Three Food Stocks That Are Definitely Worth A Look