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Current DateTime: 08:43:28 23 Nov 2009
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Use Food Inflation to Bulk Up Your Portfolio
By: Andrew Fisher | 28 Apr 2008 | 11:39 AM ET
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Picks and Pans

James Altucher of Formula Capital sees potential nutrition for investors in the world's ravenous and growing appetite for food. 

"I think we're going to see a continual increase in food prices, not only because of the price of oil, because of increased demand in Asia, Europe, the developing world," he told CNBC. 

"You have farmers moving into the cities, demanding more food, but producing less of it."

So, how does this translate into opportunities for portfolios?

Recommendations:

"I like Sysco [SYY  Loading...      ()   ], which basically has the monopoly on food distribution," he said.  "They've raised their dividend every year for the past 20 years, they have a 3 percent dividend, they've bought back 30 million shares over the past two years."

Altucher also likes the Brazilian food processor Sadia [SDA  Loading...      ()   ].

"I'd rather own a food processor like Sadia," he said.  "They're able to pass on the cost to the General Mills [GIS  Loading...      ()   ] of the world and the McDonald's [MCD  Loading...      ()   ] of the world.  They have 7 percent margins.  They've been able to avod the margin compression that's happened to Tyson Foods [TSN  Loading...      ()   ], so I think you can benefit there."

Pans:

Altucher advises avoiding General Mills, McDonald's, and Kellogg [K  Loading...      ()   ].

Disclosure:

Neither Altucher nor his firm own any of the mentioned stocks.

Disclaimer

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