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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