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No More Unlimited Breadsticks

Thursday, 29 May 2008 | 6:37 PM ET

If you're playing CNBC's Million Dollar Portfolio Challenge, the following trades could be something to think about, suggests Dylan Ratigan.

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As food prices surge companies that can aggressively hedge their costs should benefit. What’s worth watching?

Investors are betting that Darden Restaurants stock will remain a tasty treat despite high food costs. On Tuesday Merrill Lynch upgraded DRI to “Buy” largely due to their ability to hedge costs. Subsequently the stock surged nearly 4%.

What other companies could be similarly well positioned? Jon Najarian came up with the following….

Kellogg’s

The cereal maker hedges 70% of their exposure to grains.

Starbucks

The java gianthedges directly with farmers and has $320 million or its entire 2008 coffee hedged. They also hedge currency but were not specific, reveals Najarian.

How would you trade it?

I think the better trade is to short the poorly hedged restaurants, Najarian says. It seems to me that both Bob Evans and Buffalo Wild Wings fall into that category.

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Tomorrow's Trades #2
With food inflation surging, restaurants are hedging costs, with the Fast Money crew.

If you're playing CNBC's Million Dollar Portfolio Challenge, the following trades could be something to think about, suggests Dylan Ratigan.



















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Trader disclosure: On May 29, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (BTU), (C), (AGU), (NUE), (GS), (INTC), (MSFT); Finerman Owns (GS); Finerman's Firm Owns (MSFT), (SUN), (TSO), (VLO), (AAPL); Finerman's Firm Owns SPX Index Puts; Finerman's Firm Is Short (BIG); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm And Finerman Own (GLNG); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY Pete Najarian Owns (AAPL), (ANR), (BHI), (TSO), (XTO), (XLF), (HPQ), (BKC) (MAS), (ENER), (SYMX) (SVNT); Pete Najarian Owns (BAC) Puts

Jon Najarian Owns (DRI), (SBUX)

  Price   Change %Change
BOBE
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BWLD
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DRI
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K
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SBUX
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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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