100 Stocks to Offset Rising Food Prices

The government’s big ethanol push is driving up the prices of everything including a night at the movies. I just heard on the news that the price of popcorn has increased due to higher corn prices as more corn is being used to produce ethanol. It is time to think like an investor and put a hedge in place to offset rising prices at the grocery store as well as the movie theater. Purchase a few of these agriculture stocks and not only will it make up for the higher prices, but it will put a few extra bucks in your pocket.

Our survey begins with the Capital Goods & Services sector - home of Farming Machinery giant Deere Company. Deere is a household name, but have you heard of CNH Global NV (CNH)? The company is based in Amsterdam, the Netherlands. It manufactures and distributes agricultural and construction equipment worldwide. The company generates $13B in revenue - making it about half the size of Deere. As the saying goes, good things come in small packages as the market has bid it up 90% year to date.

Next up is Cal Maine Foods (CALM) a member of the Consumer Services Sector. I owned CALM, an egg producer, several years ago during the Atkins diet fad. I had completely forgotten about it until a reader reminded me of it.

The Chemical-Specialty stocks in the Materials sector are just downright internet like. Farmers anxious to capitalize on higher commodity prices are not thinking twice about using the best fertilizers. Take your pick Terra Nitrogen (TNH), CF Industries (CF) or Mosaic (MOS): 286%, 136% and 79% year to date returns respectively.

Agribusiness and Food Products reside in the Consumer Goods Sector. Dr. Marc Faber, who predicted the U.S. stock market crash in 1987, is quite fond of investing in farmland. Cresud (CRESY) may be a good way for small investors to gain exposure non-US farmland. Cresud is an Argentine agricultural company whose businesses include grain production (soybeans, wheat, sunflowers and corn), beef and milk production, forestry and it owns 1.28 million acres of land. Cresud is up 25% year to date.

The Food Products industry completes our survey. I assumed that it was too far down stream, but look at jewels in this sector. Do you think that there will be a bumper crop in avocados this year? Calavo (CVGW) which engages in the procurement and marketing of avocados is your play. It must have been a nice crop, because the stock is up 26% year to date. How about a combination emerging markets and Ag play? Industrias Bachoco (IBA) a Mexican egg producer would be the ticket. However, the crown jewel goes to chicken processors. Chicken neck ringer Sanderson Farms (SAFM) is up 50% this year.

Comments

[Sole:]

Good information, now I can set up a defensive strategy for my portfolio in this inflation envionment.

2008 Feb 13 08:25 AM

[pitchforkpaul:]

I just read this on April 8th, i had somehow bought CALM @ re $20,and own BG, POT, & MON. They have all done well! This guy was right on the money! I am looking into some of his other suggestions...

2008 Apr 08 12:31 PM