Use Food Inflation to Bulk Up Your Portfolio

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 , 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 .

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

Pans:

Altucher advises avoiding General Mills, McDonald's, and Kellogg .

Disclosure:

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

Disclaimer

© 2009 CNBC.com