"With $37.2 billion in revenues in 2007, Kraft Foods (NYSE: KFT) is the largest food manufacturer in the U.S. and second-largest worldwide," notes leading turnaround stock expert George Putnam.

The editor of The Turnaround Letter explains, "New management has begun to shake things up and the turnaround program is well underway." Here's the advisor's review.

"The roots of some of Kraft's products reach all the way back to 1767, but it wasn't until 1903 that James L. Kraft started his wholesale cheese business from a horse drawn wagon in Chicago. Today, Kraft produces many of the best-known food brands in the world.

"In 1988, Philip Morris (renamed Altria) purchased Kraft, and in 2000 it integrated the purchase of Nabisco into Kraft. Altria sold a small stake to the public in 2001, but maintained majority control until 2007, when the company was completely spun off as an independent company once again.

"Under the Altria umbrella, Kraft stagnated, with declining revenues and little product innovation. As a result, the stock price today is within $1 of the price where it was when first sold to the public in mid-2001.

"New management has begun to shake things up at Kraft. In June 2006, veteran food executive Irene Rosenfeld became CEO, returning to Kraft from a stint at Pepsico running its Frito-Lay division.

"The organic food industry is surprisingly resilient in an economic downturn," explains Benjamin Shepard, contributing editor with Personal Finance.

He adds, "Mainstream retailers and your corner grocer have been embracing the trend, devoting an ever-growing amount of shelf space to organic foods." Here's a trio of favorites.

"What was essentially a nascent industry in 1997 with $3.6 billion in sales has exploded to a behemoth with almost $14 billion in sales in 2006, according to the Organic Trade Association.

"And barring a major economic disaster worse than we've seen thus far, the industry looks set to continue double-digit growth well into the next decade.

"That's not to say there aren't potential troubles ahead as commodity prices continue to soar. Organic farming techniques tend to be more cost intensive--ironically enough--and transport costs continue to swell.

"But so far the industry has been able to pass the bulk of the higher costs onto consumers, and although sales volumes have dropped off and profits are down, those consumers are as dedicated as ever.

"The soaring cost of food isn't just hitting families in the US; it's hitting everyone around the world," says Neil George. Here, in Personal Finance, he looks at some agriculture, chemical and seed plays.

"During the past five years, consumer food costs have soared by more than 117%. And that momentum is increasing; in the trailing 12 months alone, prices surged more than 52%.

"The mega-investors aren't waiting around; they're buying into other parts of the ag business-from grain elevators to ag processors and distributors-as a workaround for such potential regulation.

"You shouldn't be sitting on your hands, either. This food trend is going to be here for a while, so you better stake your claim while buyers still outnumber sellers.

"One way to invest in this trend is to step into companies that are serving the ag producers. This means the companies developing and selling engineered seeds, as well as chemicals and fertilizer products needed to not just grow crops but more bountiful and, therefore, more profitable crops.

"Powershares DB Agriculture Fund (ASE: DBA) is a new addition to the capital gains portfolio at TheMoneyMan.com Market Newsletter. Here the latest by BizRadio host Daniel Frishberg.

"An area of the market that hasn't been affected by the economic slowdown and isn't correlated with the equities has been the commodity markets. Global demand for commodities has continued to increase.

"This has lead to record highs for most commodities, including soft commodities. We expect this to continue. There are several reasons for this.

"First, emerging markets are developing at a rapid pace and their populations are becoming richer and can now afford to eat better. That leads to higher prices in soybeans, corn, wheat, etc. Second, there are government mandates for producing ethanol which has driven up the price of corn.

"It's time to go value investing," says contrarian Eric Roseman, adding, "It's time to sink your teeth into America's oldest confectionary company" -- The Hershey Corporation (NYSE: HSY).

The editor of the industry-leading Commodity Trend Alert explains, "We love chocolate and want to own a great brand name that is likely to be acquired or partially acquired by a competitor at this low price." Here is his review.

"There's nothing more satisfying than a candy bar -- well, almost. I get even more excited about finding a great company or, in this case, a chocolate franchise selling at a distressed price, paying a nice dividend and home to shareholder activists seeking to boost their return on equity.

"We have regularly sought to identify distressed or contrarian blue chip stocks since 2001. The bottom line has to be deep-value and a strong catalyst for change as corporate earnings perform a 360-degree turn.

"Over the last two years, Hershey's common stock has been a real dog. HSY has shed almost half of its value since 2006, as investors grow frustrated with its board, ownership structure, faltering sales and a rudderless earnings strategy.

Want to hold a small but interesting stock that is rather thinly followed by analysts? Try Texas Roadhouse, Inc. (NASDAQ: TXRH), a casual dining steakhouse that features in-house meat cutting. Pick your own steak and watch it being cooked just for you. All the home-made bread you can eat. Throw your peanut shells on the floor. Average meal price is $14.00. Texas Roadhouse currently has 250 restaurants in 43 states, with plans to open another two dozen before the end of 2006. In addition to steaks, the menu also features beef ribs, pork and chicken. Carnivores rule here.

Texas Roadhouse went public in 2004. The stock split 2:1 on September 26, 2005. Shares have slowed a bit since then. Senior management made a presentation on September 19, 2006 at Bank of America's 36th Annual Investment Conference in San Francisco. Highlights of the presentation are: $600 million in total revenues for 2006. Income from operations is forecast to exceed $55 million (I said it was a small company). Earnings per share should be in the 39-43 cents range. Average per restaurant sales volume for 2006 is forecast at $4 million. Sames stores sales growth is modest at 2-3%.

Currently, Texas Roadhouse serves dinner during the week, but expands to include lunch as well as dinner on weekends. Restaurant stocks are notoriously fickle investment vehicles, but Texas Roadhouse compares favorably with its closest competitors, Outback Steakhouse and TGI Fridays.

TXRH closed at $13.53 on September 19, 2006, up 3 cents per share. 798,041 shares traded hands.

[Photo The Jamoker]