AOL Money & Finance

Riding the 'four food groups of the apocalypse'

More

We don't expect to find investment advice from opinion columns, but New York Times columnist Frank Rich unleashed a quartet to those willing to read between the lines in his recent piece "Herbert Hoover Lives."

Here's the money quote (no pun intended) from the theater critic turned political pundit: "What are Americans still buying? Big Macs, Campbell's soup, Hershey's chocolate and Spam -- the four food groups of the apocalypse."

As Rich points out, Americans are indeed flocking to low-cost fast food producers such as McDonald's (NYSE: MCD) for their dining experiences. In fact, according to a recent ChangeWave Research survey on consumer dining habits, McDonald's was one of the few restaurants that showed any kind of positive momentum going forward.

If the company's strong fourth-quarter results and January sales are a harbinger of things to come, then the stock could be in for a fat future. Although earnings at the restaurant chain declined 23% to $985.3 million, or 87 cents a share, in the fourth quarter from $1.27 billion, or $1.06 a share, a year earlier (when it had a 33-cent gain from tax items), the all-important same-store sales number rose 7.2%. (January sales maintained the trend with same-store sales up 7.1%.)

If we take a look at the chart for McDonald's shares over the past 52 weeks, we can see that it got caught up in the sharp declines of October and November.

Since falling to those October-November lows, however, the shares have managed to fight their way back. They now are trading right at both their short-term, 50-day (blue line) and long-term, 200-day (red line) moving averages -- both key technical indicators that, if breached decisively, could mean more upside for the shares.

OK, investors do seem to have a taste for MCD shares, but what about the stocks behind the other "food groups of the apocalypse"?

Another beneficiary in tough times is soup, which brings us to Campbell Soup (NYSE: CPB). This is one of the ultimate stay-at-home comfort foods and one that continues to shine even in tough times.

Campbell Soup just broke above its 50-day moving average, although the shares remain well below their 200-day average. Here it looks like the soup maker has a bit more simmering to do before it breaks above overhead resistance and investors can say it's "mmm, mmm, good."

Our new president and Monty Python have a tie to our next food group -- Hormel Foods' (NYSE: HRL) Spam.

Barack Obama's home state, Hawaii, consumes the most Spam per capita, and comedy fans can likely quote from the Monty Python "Spam" sketch or sing one of the tunes from the musical "Spamalot."

In these tough economic times, we're reminded that Hormel's Spam is perhaps the quintessential Depression-era food.

Hormel's shares are trading around their 50-day moving average. But similar to CPB, the shares have a way to go before they break through their long-term trend line.

Finally, when we're stressed out, our sweet tooth beckons. And there's no sweeter American company than Hershey (NYSE: HSY), whose brands include Reese's, Jolly Rancher, York Peppermint Pattie, Twizzlers and Kit Kat, as well as the "Great American Chocolate Bar."

The shares just surged above both the 50-day and 200-day moving averages, and the company recently announced fourth-quarter profits that bested Wall Street estimates.

Hershey reported seeing increased sales in its lower-priced candy products, a move one might expect given the current economic downturn.

The McDonald's and Hershey examples show that at least two of the four food groups of the apocalypse are on their way toward a more bountiful equity feast. So, if you're looking to add a little comfort food to your portfolio, you might want to step up to the plate and check out these recession plays.

Jim Woods is a Senior Editor for OptionsZone.com. He is the co-author, along with Tobin Smith, of the new book, "Billion Dollar Green: Profit from the Eco Revolution."

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA+132.7910,450.95
NASDAQ+29.972,176.01
S&P 500+14.861,106.24

Last updated: November 24, 2009: 05:19 AM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

    BioHealth Investor Headlines

    WalletPop Headlines

    My Portfolios

    Track your stocks here!

    Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

    BloggingStocks Partners

    More from AOL Money & Finance

    WalletPop Headlines