Starbucks Corp.

Getting people to change their breakfast habits will be difficult. In tight economic times, people will gulp down their morning meal at home. If they do eat out, they will look for cheaper alternatives than Starbucks. McDonald's Corp. (NYSE: MCD) has made serious inroads in the breakfast market, as has Dunkin' Donuts. Sorry, Starbucks lovers, but I found their coffee far less biter than Starbucks. I even have two bags of Dunkin' java (regular and decaffeinated) in my house.

Continue reading Starbucks gambles on healthier breakfast fare

Starbucks gambles on healthier breakfast fare originally appeared on BloggingStocks on Wed, 03 Sep 2008 12:55:00 EST. Please see our terms for use of feeds.

Whole Foods Market tries to prove it's economical originally appeared on BloggingStocks on Mon, 04 Aug 2008 13:30:00 EST. Please see our terms for use of feeds.

Benningan's

Benningan's, Steak and Ale go bankrupt as casual dining chains suffer originally appeared on BloggingStocks on Tue, 29 Jul 2008 15:30:00 EST. Please see our terms for use of feeds.

Corn is used both in food for humans and as cattle feed. It is also the main ingredient of most ethanol-based fuels. There has been real hope that this kind of alternative energy will cut US reliance on gas. But, the price of corn is up 47% this year. That undercuts the value of ethanol as its price rockets.

The corn harvest in the US could be relatively poor this year, putting more pressure on food prices, both here and in countries where large numbers of people are under-nourished. Another run-up in corn could help drive yet another commodity inflation spiral.

According to Bloomberg, "Rainstorms sweeping the biggest corn states in the U.S. are damaging a crop that's already failing to keep pace with global demand."

The trouble with corn crops is that they cannot be easily replaced by any other agricultural product. And, there is pressure on wheat and soybean prices already.

The solutions to corn yields, are, unfortunately, long-term. Companies, led by Monsanto (NYSE: MON) are increasing research and production of genetically altered seed which will grow in harsh climates and poor soil.

But, that fix to the problem is several years off, and the acute problem is now.

Douglas A. McIntyre is an editor at 247wallst.com.

Will corn prices move higher? originally appeared on BloggingStocks on Tue, 10 Jun 2008 10:48:00 EST. Please see our terms for use of feeds.

Shares in H.J. Heinz Company (NYSE: HNZ) are trading at a 52 week-high, on the heels of a better than expected earnings report. The AP reported that: "In the quarter, Heinz earned $194.1 million, or 61 cents per share, compared with $181 million, or 55 cents, a year earlier. Sales rose by 11 percent to $2.69 billion, driven by strong sales in Heinz's top 15 brands. Prices rose 4.5 percent while sales volume went up by 1.2 percent."

The company also raised its dividend by 9%. What's interesting about the report is that we are finally seeing food producers be able to pass on some of their costs to consumers. This obviously will spell continued inflation pressures going forward, but for the food producer it provides some welcome relief. With the soaring costs of food materials, the ones making all the money are those that are producing the materials. Those that take the materials and add value to them are getting crushed. Until now they have had to eat much of the increase in production costs, thus adversely impacting their bottom lines. The fact that Heinz is trading at a 52 week high is a testament to solid management.

This group has the potential to move higher. If we were to get a drop in food material prices -- nothing goes up forever -- stocks like Heinz conceptually could benefit.

For long term investors looking for a contrarian play, you may want to take a look at the food group.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/29/08.

Please pass the Heinz ketchup originally appeared on BloggingStocks on Thu, 29 May 2008 16:14:00 EST. Please see our terms for use of feeds.

Call it one of the smartest decisions in food retail this year. McDonald's (NYSE: MCD) will not pass on the cost of most food commodities to its customers. It will keep most prices on its menu where they are today.

According to Reuters, McDonald's "is willing to absorb some of the higher costs for ingredients such as oil, meat and dairy to promote customer loyalty," Chief Executive Jim Skinner said. The company won't let upward pressure on its products hurt its business.

Some may see the program as short-sighted, a move that will erode margins and hurt earnings for the next couple of quarters or more. But McDonald's has the financial strength to support the move. It may be a way for the chain to pick up market share as inflation takes a toll on its competitors. If it raises prices, McDonald's will simply look more attractive.

Look for McDonald's same-store sales to be better than the competition. It is giving consumers a real reason to stop by.

Douglas A. McIntyre is an editor of 247wallst.com and author of the Ten Stocks Under $10 newsletter.

McDonald's (MCD) eats some food costs originally appeared on BloggingStocks on Fri, 23 May 2008 03:52:00 EST. Please see our terms for use of feeds.

The U.S. government now says the price of food will rise 5.5% this year. That revises an earlier estimate of 4.5%. According to The Wall Street Journal, "The forecast released Monday by the Agriculture Department is the third consecutive month the agency has raised its food-inflation forecast."

The number may be too low. The last federal government data showed the cost of food rising more than it had in almost two decades. The prices of rice, wheat and corn are still near all-time highs, and global demand is likely to move those numbers higher. The demand for ethanol is an often-mentioned reason for the price increase in corn. There is little reason to see that changing.

If food costs were going up by themselves, things might not be so bad for American consumers. But consumers are being beaten down by the "triple play" of rising gasoline and food prices coupled with difficult access to credit. Their need for money is rising and their access to it is dropping off.

Food is part of a problem, but only a part. Until the government comes up with a solution, consumer spending is going to be limited to bread and gas.

Douglas A. McIntyre is an editor at 247wallst.com and author of theTen Stocks Under $10 letter.

US raises food inflation estimate originally appeared on BloggingStocks on Tue, 20 May 2008 08:41:00 EST. Please see our terms for use of feeds.

Continue reading Inflation bites: Tough times ahead for Whole Foods

Inflation bites: Tough times ahead for Whole Foods originally appeared on BloggingStocks on Thu, 08 May 2008 11:13:00 EST. Please see our terms for use of feeds.

Reuters reports that Wal-Mart Stores, Inc. (NYSE: WMT) posted better-than-expected revenue growth in the first quarter. As I suggested last month, this makes sense to me because Wal-Mart is the beneficiary of the recession diet.

The details suggest that Wal-Mart is becoming more popular than analysts expected thanks to its low prices and the squeezed consumer. Specifically, Wal-Mart sales rose 3.2% rise in April boosted by demand for basic items like groceries and medicine. Analysts, on average, were expecting same-store sales to rise 2.1%, according to Reuters Estimates; Wal-Mart had forecast a gain of 1% to 3%.

Why is this happening? People need food, shelter, medicine, and gasoline to drive back and forth from their jobs. And the price of all those items is rising. I estimate that the median family takes in $838 a week after tax. If that family fills up two tanks of gas a week -- that amounts to 40 gallons times $3.62 a gallon or $145 a week. That's 17% of the weekly budget compared to 15% a year ago when gasoline was $3.10 a gallon. Food prices have skyrocketed as well with rice prices tripling this year.

Continue reading Wal-Mart profits from consumers' recession diet

Wal-Mart profits from consumers' recession diet originally appeared on BloggingStocks on Thu, 08 May 2008 09:52:00 EST. Please see our terms for use of feeds.

The New York Times reports that the market was up 190 points yesterday and has risen 11% in the last few weeks. Not only that, but AP says that the jobless rate fell to 5% in April -- better than the expected 5.2% rise. So does this mean that happy days are here again? No. And you should use today's rally to take money off the table if you have any.

Why? Things are not good for the consumer who accounts for 70% of economic growth. My mailman stopped me yesterday after my run and gave me a grim look. He is very friendly and talks to many people on his delivery route and elsewhere. And he told me that with gasoline prices so high, many people are canceling their vacations so they can pay their bills.

As I posted here, gasoline prices are gobbling up a bigger and bigger piece of the median family's income. And USA Today reports that worldwide food prices have skyrocketed 45% -- sending consumers on a recession diet. Businesses are having trouble getting money from banks because the banks still have $500 billion in hard-to-value assets which requires them to hold onto every scrap of capital they can get.

Continue reading Should you sell into this sucker's rally?

Should you sell into this sucker's rally? originally appeared on BloggingStocks on Fri, 02 May 2008 09:45:00 EST. Please see our terms for use of feeds.

Shares of PepsiCo Inc. (NYSE: PEP), and Hershey Co. (NYSE: HSY) fell as investors were worried that soaring commodity prices would hurt profit.

Net income at Pepsi increased to $1.15 billion, or 70 cents a share while sales soared 13 percent to $8.33 billion. The company benefited from strong international sales. It also reaffirmed 2008 guidance of "high-single-digit net revenue growth" and earnings of at least $3.72. Analysts were expecting profit of $3.73 on revenue of $42.85 billion, according to Thomson Financial.

"We delivered a strong first quarter," said Chief Executive Indra Nooyi in the earnings release. "During the quarter, we faced the challenge of a macroeconomic slowdown in the U.S. and continued global commodity inflation, but the strength and breadth of our global footprint and portfolio helped us deliver strong first quarter results."

The picture at Hershey was hardly sweet. Net income fell to $63.2 million, or 28 cents per share, compared with $93.5 million, or 40 cents, a year earlier. Total cost and expenses rose to $1 billion from $942.7 million.
Revenue rose $1.16 billion. Analysts had expected profit of 39 cents on revenue of $1.17 billion. The chocolate maker also reaffirmed its profit of $1.85 to $1.90 on sales growth of 3 to 4%. Wall Street consensus is for profit of $1.84 on revenue of $5.09 billion.

The problems caused by food inflation have only begun.

PepsiCo, Hershey shares slump on food inflation worries originally appeared on BloggingStocks on Thu, 24 Apr 2008 13:47:00 EST. Please see our terms for use of feeds.

Continue reading Rice shortages in America? Unbelievable

Rice shortages in America? Unbelievable originally appeared on BloggingStocks on Thu, 24 Apr 2008 11:50:00 EST. Please see our terms for use of feeds.

Continue reading Rioting over food inflation due to ethanol

Rioting over food inflation due to ethanol originally appeared on BloggingStocks on Mon, 14 Apr 2008 16:00:00 EST. Please see our terms for use of feeds.