Believe it or not, Baidu’s market cap of $15 billion is quickly approaching Yahoo’s stock value of $23 billion.

YHOO is currently being priced at the market at only 1.5 times that of BIDU yet, in an “apples to apples” comparison, blatant discrepancies stand out. YHOO is expected to generate $5 billion in sales and $700 million in earnings, while BIDU is forecasted to produce a top line of $900 million and earnings of $309 million (assumes a staggering 44% growth rate). The point is, YHOO’s sales are almost six times higher, while its earnings are triple that of BIDU. Therefore, it is reasonable to deduce that YHOO’s market cap should be three times that of BIDU, not one and half. There are inefficiencies between these two equities that should be exploited before the market eventually recognizes this abnormilty and prices them accordingly.

Despite the constant threat of legal issues facing Imperial, things are starting to look up for the largest publicly held US sugar producer. Imperial Sugar (IPSU) has completed the total rebuild of its Port Wentworth Refinery into a modern “state of the art” facility. The plant, which is expected to be fully operational by the end of the month will enable Imperial to refine and package sugar more safely and efficiently than the old plant.

The perfect storm: Sugar has recently climbed to historically high levels on the commodity markets .The spread between the cost of raw sugar and refined sugar has never been greater, enabling the company to hit the “sweet spot.” Although the company’s cost of raw sugar rises, the refined sugar segment rises at an even greater percentage, enabling them to significantly fatten up their gross profit margin potential. To make matters even better, the cost of natural gas has plummeted nearly 50% in the past four months (the company uses tremendous amounts in the refining process). The combination of low input costs, elevated selling prices and a higher efficiency plant sets up IPSU for a golden opportunity that probably comes around "once" every ten years.

Since WINN emerged from chapter 11 nearly three years ago, the company has shown some significant turnaround momentum. They have nearly generated $500 million of EBITDA earnings and remodeled over 170 of its stores. The striking thing about the remodel program is they have been able to achieve one third of their entire store base using nothing but their own cash flow (the company is debt free) yet shareholders have been left holding the bag. The truth is, the share price is near the same levels as the IPO price in Nov of 2006. All this progress and patience results in a big fat “zero return” for the original shareholders. What’s up with that?

Wall Street overreacted on first quarter results: First quarter results were bad, but they were not that bad. In fact, the company was able to still improve its gross profit margin from 27.9% to 28.2% despite a 2% loss in the top line. The company also saw its transaction counts stabilize, though its basket size shrunk due to deflationary headwinds and consumers' lack of overall confidence, especially due to continued pressure on the job market. WINN’s CEO expects the second half of fiscal 2010 will show deflation transform into moderate inflation, while employment and the overall economy will gain additional traction.

Expensive is a relative term. Those on the short side would say Google (GOOG) is expensive while those holding long positions would probably argue the contrary.

The fact is, GOOG has been on quite a run lately as analysts keep piling on with continual sweetening views. The trouble is, this could be a disservice to longs as these increased expectations increase the possibility of an eventual disappointment. The problem is the law of bigger numbers: each time GOOG reports it is dealing with a larger comparison number from the previous year’s period. This increase in the denominator makes growth increases more difficult.

If you listen close to Luby's (LUB) last quarter’s conference call, you will detect a faint glimpse of a possible turnaround in progress. Things are looking up:

1. Culinary contract sales are up 61% .
2. Cost of food dropped 10 basis points to 27.3% of sales.
3. Its “other expenses “ category fell 90 basis points to 22.6%.
4. Payroll costs dropped $1.2 million.
5. Management has a new marketing plan in effect.

On the negative side, the company’s SG&A costs spiked $200,000 to 8.6% of sales, something management must quickly get under control.

Well I have to admit, arguing with the market is a bad bet, especially when you are short one of the hottest search engines in the world, Baidu (BIDU). Being part of the last $100 rise in a BIDU short position has not been a pleasant experience, but being stubborn too long in the market is a recipe for disaster and I finally covered my position after the shares ran up another $40 just in the last two trading days.

I just couldn’t take the pain anymore and decided to throw in the towel. For the record, every time I cover, it seems the stock drops immediately after (anybody else have that problem?). Why is it climbing at such a climatic pace? I guess the fact that Google's (GOOG) CEO said the worst of the economy is behind us, had something to do with yesterday’s spike, or speculators on the sidelines are jumping in at any price in fear they might miss the boat as it swooshes by. But let’s face it, the bulk of the rise is probably attributable to shorts covering such as myself and momentum players trying push the limit. The fundamentals have been temporally replaced with the preoccupation of (or the perception of) robust earnings growth. Emotion and greed are running rampant again which is a precursor of disaster.

KR reported second quarter results that were stellar. Sales were up 3.5% (excluding fuel sales), earnings of 39 cents beat expectations by two cents and gross profit margin increased 59 basis points to 23.11%. In addition, debt was pared down $200 million and nearly 3 million shares were repurchased in the open market (there are still 425 million shares remaining for purchase.)

The trouble was, KR ratcheted down its fiscal 2009 guidance to the $1.90 to $2.00 range which spooked the Street -sending the shares down as much as 10%. I expect management is playing the conservative side on guidance and is certainly posturing a under promise-over deliver mentality.

Since the last time I wrote about SWY (over a year ago), the stock price has taken a huge turn for the worst, dropping more than 25% since I listed the attributes of buying it in Sept of 2008. I thought it was a relatively safe bet, but in hindsight, I was wrong, very wrong . Hopefully this time around I can make amends for the errors of my ways.

It is now a safer bet: The lower the price gets, the better the value becomes, and at this juncture I don’t see much downside left. The company is much leaner and stronger than it was last year and even a more compelling buy.

The way Wall Street has turned on SVU, you’d think the company had one foot on a banana peel and the other on a “slip and slide”. The Street has literally written it off as damaged goods because of its heavy debt load. It is evident that most don’t want to touch it with a ten foot pole. The good news is this kind of disdain usually presents opportunity for those investors with a “glass half full” mentality. The overall aversion to this equity makes it an attractive play to value seekers searching for a compelling contrarian position to open.

In the last six weeks, the Dow has risen 15% while Amazon (AMZN) has fallen about 10%, (that represents a staggering 2500 basis point difference) AMZN’s poor relative strength should be a concern to longs that further price erosion could be right around the corner.

What is driving the shares lower? Obviously, there are more sellers than buyers, but digging deeper, a few possible scenarios are:

Food stocks have been on a tear lately. Attributes such as more predictable earnings, juicy dividends, lower volatility and more reasonable price multiples are at the forefront of the sector’s recent success. They aren’t highflyers, glamorous or exciting like the tech sector, but they will help you sleep better at night.

The Basic Food Fund (BFF) certainly lagged the overall market the past five weeks rising a mere 9% from $167.73 to $182.93 compared to a more robust rally in the DJIA's 14% hike from 8332 to 9506, but it also won’t fall like a rock when the major averages correct through profit taking in the near future.

Priceline (PCLN) has been on a roll lately. The shares have more than doubled in the last six months alone and the analysts seem to be putting it in the “walk on water” class. However, the higher the shares climb, the more dangerous they become, as their potential fall becomes that much greater. It is safe to say the stock has gone up too far in too short of a time frame and is certainly prone to a correction through a wicked dose of profit taking.

Since reporting second quarter earnings, the shares have been on a tear, tacking on an impressive 20% gain from $130 to $155 just in the last nine sessions. Is it sustainable? Probably not, as the shares seem to be trading more on emotion and momentum than logic. If you add in the fact that some scared shorts are being forced to cover, then the upward force is even more compelling. The problem is, these types of rallies are usually not sustainable and this appears to be a classic case of sellers honing in on greater fools to dump their shares on them. Somebody will be left holding the bag when everybody decides to head for the exits at the same time. A minimum retracement of one half its recent $25 run-up since Aug 10th appears plausible.

The last time Baidu (BIDU) reached these levels, I pleaded my case for the need to short "at will" in a May 2008 article, titled “A Train Headed for Derailment” and yes, the train did skid off the tracks on its way down to the low $100’s. Well, here we go again, because approximately 15 months later, BIDU is coincidently presenting nearly the identical scenario.

Going short now is like shooting fish in a barrel because it is so overvalued and overhyped. The stock has more than tripled since the beginning of the year and now trades at a staggering 58 times 2009 earnings estimates. It has simply gone up too far in too short of a time frame and is quite vulnerable to a nasty selloff of more than 20%, especially with earnings expectations ratcheted up to such sky-high levels.

We have all heard it: food stocks are defensive in nature so that when things are dreadful, they shouldn’t get beat up as bad, and when things are good, they don’t participate with the same rigor on the upside as other stocks. But in this market, it just hasn’t worked out that way. In fact, when the market dived earlier in the year, food stocks actually had poorer relative strength than other sectors, but then when the market bounced back, the food sector’s relative strength was superior. The moral of the story: Sometimes you just have to throw out all the rules and trade by the “seat of your pants” utilizing your own gut instincts as your guide.

Disclosure: Long all equites included in the BFF Index.

Flowers Foods (FLO) is a national baked-goods operator with such brands as Nature’s Own, Sunbeam and Holsum. The company generates sales of nearly $2.5 billion a year and has been on a roll lately. It reported solid first quarter results generating a 19% sales gain, and a 5% increase in earnings. Although the company’s gross margin dropped from 48.3% to 46.8% (partially due to the startup costs associated with its new Kentucky bakery operations) it was still able to pare its SG&A costs from 37.2% to 36.4%. Its dividend is sound and management has continued to raise it steadily (seven consecutive years). In fact, the company just boosted its payout by 17%, helping it produce a juicy yield of 3.2%. The company’s meager debt of $272 million gives it a low 41% debt to equity ratio and at a forward earnings multiple of 15 times 2009 estimates of $1.43. Its value could be construed as compelling (its multiple falls below the average of its peer group).

Buyback in progress: The company initiated a stock repurchase program in 2002 of 16 million shares, raised it to 23 million in 2005 and finally to 30 million in 2008. It still has 8 million shares remaining for further purchases and when completed, will amount to 33% of its outstanding shares. The company is also rich in real estate holdings. Including its home offices, it owns all but one of the 39 production facilities it operates throughout the US.

The "BFF" index has replaced SCS, PBY and JBLU with the following food related equities: LUB, FLO and DLM. The reshuffling, which was clearly overdue will present an index much more representative of the food sector. The old index finished at $141.55, and the new index starts at $157.74. The new index will include 14 equities.

Component highlights

BRID: The snack food purveyor keeps making higher highs and higher lows as it approaches fresh four year highs. A challenge of the $10 area by midsummer seems plausible.

Bridgford Foods (BRID) delivered solid second quarter results when it recorded sales of $25.6 million (a 2.9% increase) and earnings of 11 cents versus an 8 cent loss. The results were released after Monday’s market close in a 10Q filing (there was no press release). The notable 19 cent swing in earnings was attributable to a substantial drop in input costs (flour and meat). BRID’s gross profit margin soared 850 basis points from 34.3% to 42.8%. Although historically the second quarter is the company’s weakest, BRID still managed to even show a 460 basis point margin improvement on a sequential basis, an impressive feat in itself. Further benefiting the bottom line was a 3% drop in its shares outstanding, from 9.69 million to 9.43 million.

Under covered: The beauty of this equity is the fact it virtually has no research coverage. There are no earnings estimates, upgrades, downgrades or any opinion for that matter. The good thing about this phenomenon is that the stock is so unknown, it leaves plenty of room for new buyers (such as institutions - who currently own less than 3%) to come a courting, one of the criteria investment guru, Peter Lynch (of Fidelity Magellan fame) utilizes when picking undervalued situations.

There is a smorgasbord of good stock plays at this juncture, but nothing takes the cake like Luby’s Cafeteria (LUB). This regional restaurant chain has the financial muscle to weather the storm and come out smelling like a rose for those willing to start nibbling at this very oversold situation. Although the share price is closing fast on another test of its 52 week low, it could bounce back faster than Bluto yells, “food fight” at Faber College. The fact of the matter is, this stock is like a very tightly coiled spring and the remotest good news could launch it into the stratosphere.

Costs are falling: Despite almost a 3% drop in sales, the cafeteria operator was still able to reduce many of its cost centers. LUB’s food costs dropped 110 basis points from 27.4% to 26.7%, Its general & administrative outlay fell 150 basis points from 9.4% to 7.9% and its “other costs” category decreased 120 basis points to 20.2%. The only category to show an increase was payroll, up a mere 10 basis points from 33.7% to 33.8%.One clear advantage LUB has over its competitors, is the fact it owns the property and buildings on 89 of its 120 locations. This insulates the company from the effects of escalating rents as well as enables the company to have lower occupancy costs (they pay no rent on their stores). There have been many who have suggested the restaurant chain should monetize these holdings since their market value is much greater than are carried on their books, but so far, management has been reluctant to go down that path, but everyone has their price.

Shareholders received some good news late Monday, when Winn Dixie (WINN) released better than expected third quarter results and ramped up guidance. Its shares soared more than 12% in after hours trading after smashing earnings estimates of 12 cents, by delivering a "awe inspiring" 159% beat of 30 cents. The company also ratcheted up its fiscal 2009 EBITDA outlook range substantially - lifting the bottom of its prior range to $145 million (a 32% increase) and its top end to $152 million (a 22% increase).

Operational improvement evident: WINN’s gross profit margin improved 90 basis points from 28% to 28.9% due to beneficial product mix changes, lower transportation outlays and reduced LIFO costs. Identical store sales increased .2%, aided by a 4.5% transaction count gain coupled with a 5.3% basket size increase. On the negative side, the company’s operating and administrative expense category went the wrong way, increasing 50 basis points from 26.6% to 27.1% on higher payroll and utility costs. WINN’s income tax rate didn’t help matters either, spiking 250 basis points from 40.9% to 43.4%