Can Jones and Heinz cash in on potatoes and sugar, the stable commodities?

Posted Jun 2nd 2008 4:06PM by Carol Vinzant
Filed under: Deere and Co (DE), Agriculture, Stocks to Buy

Is there a way to cash in on the commodities bubble without actually playing the commodities market? (Which, Andrew Tobias handily dismissed in The Only Investment Guide You'll Ever Need: "It is a fact that 90% or more of the people who play the commodities game get burned. I submit that you have now read all you need ever read about commodities.")

Yes, there are a handful of ETFs that specialize in commodities. The Wall Street Journal reports that investors are getting interested in farming stocks and companies like Monsanto Co. (NYSE:MON) and tractor maker Deere and Co. (NYSE:DE). Smaller companies like China's AgFeed (NASDAQ:FEED), which produces animal food and pork, is trading at about $16, down from $20 a month ago, but still nearly triple its price a year ago.

Two food commodities that the boom has not impacted too much are potatoes (which are not really part of the international commodities market) and sugar, which is heavily subsidized and mostly doesn't trade on the open market. Sugar prices recently sunk to a seven-month low because of an oversupply, Reuters says.

I wonder if there is a way to make a play for companies that use sugar or potatoes more than the other commodities. Most potato producers are private. H.J. Heinz (NYSE:HNZ), which makes frozen and canned (for Europeans) potatoes, may be one candidate, although it is probably too huge of a company to have much impact.

How about companies that spurn corn syrup for cane sugar? There are a few left. Jones Soda (NASDAQ:JSDA). Jones stock fizzled out last year in its failed attempt at mass market cans. With a new CEO, Jones lost money in the first quarter but still wants to expand for its important summer season, its hometown newspaper the Seattle Times says.

Tags: commodities, Conagra, corn, DE, Heinz, HNZ, Jones Soda, JonesSoda, JSDA, MONFEED, sugar