We have a problem with inflation, but it's not what you may think.
Inflation isn't too high. The problem is that it's too low.
The Bureau of Labor Statistics reported today that consumer prices, less energy and food, rose last month by only 0.2% compared to April. On a year-over-year basis, the growth rate came in at 1.7%.
You might be wondering why this is a problem. Isn't inflation bad?
The answer is both yes and no. It's bad if it gets out of control. Think the Weimar Republic in Germany between the world wars. People literally had to use wheelbarrows to ferry their paper money between home and the grocery store.
A less extreme example was our own economy at the end of the 1970s and the beginning of the 1980s, when the then-chairman of the Federal Reserve, Paul Volker, was forced to hike up short-term interest rates to stem the double-digit increase in consumer prices. While the move succeeded at its objective, it also sent the economy into a deep recession.
Best Valued Companies To Own In Right Now: Nash-Finch Company(NAFC)
Nash-Finch Company operates as a wholesale food distributor in the United States. The company?s Military segment distributes grocery products to the United States military commissaries and exchanges in the United States and the District of Columbia, Europe, Puerto Rico, Cuba, the Azores, Egypt, and Bahrain. Its Food Distribution segment sells and distributes various branded and private label grocery products and perishable food products to approximately 1,500 independent retail locations through its 14 distribution centers. This segment also provides various services, including promotional, advertising, and merchandising programs; installation of computerized ordering, receiving, and scanning systems; retail equipment procurement assistance; accounting, budgeting, and payroll contract services; consumer and market research; remodeling and store development services; supply chain through Internet services; and securing existing grocery stores. The company?s Retail segment operates corporate-owned grocery stores under the Sun Mart, Econofoods, AVANZA, Family Thrift Center, Pick ?n Save, Family Fresh Market, Prairie Market, Saver?s Choice, Wally?s Supermarkets, and Wholesale Food Outlet banners primarily in the states of Colorado, Iowa, Minnesota, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. This segment?s conventional grocery stores offer a range of grocery products and services, such as fresh meat counters, delicatessens, bakeries, eat-in cafes, pharmacies, banks, and floral departments, as well as provide check cashing, fax services, and money transfer services. As of December 31, 2011, the company served 93 retail stores operating under the IGA banner and 50 retail stores under the Food Pride banner; and operated 43 conventional supermarkets, 1 AVANZA grocery store, 1 Wholesale Food Outlet grocery store, and 1 Saver?s Choice store. Nash-Finch Company was founded in 1885 and is based in Minneapolis, Minnesota.
Advisors' Opinion:- [By Alex Planes]
Sysco has avoided the margin compression suffered by chicken producers Tyson (NYSE: TSN ) and Cal-Maine Foods (NASDAQ: CALM ) and which was more deeply felt by smaller food-service operator Nash-Finch (NASDAQ: NAFC ) . (It is omitted from this chart due to its drop into outright negative operating margin territory (a decline of roughly 250% in two years.) However, fellow food-service company United Natural Foods (NASDAQ: UNFI ) has actually improved its margins, and restaurant chains both large and small (well, mid-size) have done an admirable job of holding the margin line in the face of rising input costs. So it appears that scale alone isn't enough to help Sysco outrun the rising costs of its products.
- [By Jeremy Bowman]
What: Shares of Nash-Finch (NASDAQ: NAFC ) and Spartan Stores (NASDAQ: SPTN ) jumped as much as 16% and 15%, respectively, after Spartan said it would buy Nash-Finch, primarily for its military stores.
5 Best Food Stocks To Own Right Now: Prestige Brand Holdings Inc.(PBH)
Prestige Brands Holdings, Inc., together with its subsidiaries, engages in marketing, selling, and distributing over-the-counter healthcare and household cleaning products primarily in North America. The company?s Over-The-Counter Healthcare segment offers a portfolio of OTC products under nine core OTC brands, including Chloraseptic sore throat remedies, Clear Eyes eye drops, Compound W wart removers, Dramamine motion sickness products, Efferdent and Effergrip denture products, Little Remedies pediatric healthcare products, Luden's cough drops, PediaCare pediatric healthcare products, and The Doctor?s brand of oral care products. This segment also provides other significant brands that include Dermoplast first-aid products, Murine eye and ear care products, NasalCrom allergy relief product, New-Skin liquid bandage, and Wartner wart removers. Its Household Cleaning segment markets household cleaning products, such as abrasive and non-abrasive tub and tile cleaner, scrubb ing pads and sponges, dilutables, anti-bacterial hard surface spray for counter tops, and glass cleaners under the Comet, Chore Boy, and Spic and Span brands. Prestige Brands Holdings distributes its products through various retail channels, including drug, food, dollar, and club stores, as well as supermarkets and mass merchandisers. The company was founded in 1996 and is headquartered in Irvington, New York.
Advisors' Opinion:- [By Sean Williams]
What: Shares of Prestige Brands (NYSE: PBH ) , a marketer of over-the-counter health care and household cleaning products, jumped as much as 14% after it announced the acquisition of Australia's Care Pharmaceuticals.
5 Best Food Stocks To Own Right Now: Seaboard Corporation(SEB)
Seaboard Corporation operates as a diversified agribusiness and transportation company worldwide. Its Pork division engages in hog production and pork processing; and the production and sale of fresh and frozen pork products, such as lunchmeat, ham, bacon, sausage, loins, tenderloins, and ribs, as well as further processed pork products, including raw and pre-cooked bacon to further processors, foodservice operators, grocery stores, distributors, and retail outlets under the Prairie Fresh and Daily's brand names. This division also produces and sells biodiesel from pork and other animal fats to third parties. The company?s Commodity Trading and Milling division sources, transports, and markets wheat, corn, soybean meal, rice, and other commodities, as well as operates flour, feed, and maize milling businesses. Its Marine division provides containerized cargo shipping service to 26 countries between the United States, the Caribbean Basin, and central and South America; and operates a terminal at the Port of Miami, an off-dock warehouse for cargo consolidation and temporary storage, and a cargo terminal at the Port of Houston for temporary storage of bagged grains, resins, and other cargo. As of December 31, 2010, it operated 10 owned and approximately 29 chartered vessels; and dry, refrigerated, and specialized containers and other related equipment. The company?s Sugar division produces and refines sugar cane, produces alcohol, and purchases and resells sugar to retailers, soft drink manufacturers, and food manufacturers in Argentina. Its Power division operates as an independent power producer in the Dominican Republic operating 2 floating barges with a system of diesel engines with combined capacity of approximately 112 megawatts of electricity. Seaboard Corporation also purchases and processes jalapeno peppers in the United States. The company was founded in 1928 and is based in Shawnee Mission, Kansas. Seaboard Corporation is a subsidiary of Seaboard Flour LLC.
Advisors' Opinion:- [By Geoff Gannon]
Not necessarily. There are some big obscure stocks. The example everyone who knows obscure stocks will give you is Seaboard (SEB). This is a company with a $3 billion market cap. But it�� also a company that has been run the way obscure companies are run.
- [By Norm Rothery]
I happened upon Seaboard Corp. (SEB) a few years ago, when I was looking for stocks that buy back their shares. It's not the most aggressive re-purchaser in the market, but it has reduced its share count by 20% since the turn of the century.
5 Best Food Stocks To Own Right Now: Nestle SA (NSRGY)
Nestle SA is a company engaged in the nutrition, health and wellness sectors. It is the holding company of the Nestle Group, which comprises subsidiaries, associated companies and joint ventures throughout the world. The Company has such business units as Food and Beverage, Nestle Waters and Nestle Nutrition. Nestle is also active in the pharmaceutical sector. It divides its products into nine categories: Prepared dishes and cooking aids, Beverages, Confectionery, Ice cream, Water, PetCare, Milk products, Nutrition and Pharma. It has numerous subsidiaries engaged in various areas of activity, including Alcon Ophthalmika GmbH (Austria), Alcon Bulgaria EOOD (Bulgaria) and Galderma Laboratorium GmbH (Germany) for pharmaceuticals; Novartis Nutrition GmbH (Austria) and Hjem-IS A/S (Denmark) for food and beverages, and Galderma International SAS (France) and Galderma Laboratorium GmbH (Germany) for health and beauty activities. The Company is headquartered in Vevey, Switzerland. In July 2008, Novartis AG acquired a 25% stake in Alcon, Inc. from Nestle SA. In March 2010, the Company acquired Kraft Foods Inc' frozen pizza business.
In April 2008, L'Oreal and Nestle SA's joint venture, Galderma Pharma S.A., announced that its United States holding company, Galderma Laboratories, Inc., had acquired approximately 97% interest in CollaGenex Pharmaceuticals, Inc. During the year ended December 31, 2004, Nestle had 500 factories in 83 countries around the world. In 2004, 15 factories were acquired or opened and 29 closed or divested.
Advisors' Opinion:- [By Rich Duprey]
Analysts at Rabobank concur. Where�Nestle (NASDAQOTH: NSRGY ) owns half the single-serve brewer market (Green Mountain's Keurig and Vue has almost a quarter of the market share), it says coffee pods represent 14% of all at-home consumption.
- [By Holly LaFon]
HL: And you��e held Nestle (NSRGY) for a long time.
TR: I first bought Nestle in 1987, and it was at that time it was very difficult to buy, and it�� probably compounded at close to 15% every year since then, total return. And it�� partly because it was so unloved at the start that the returns have been so strong. But I��e held it for 30 years, and it�� grown in large measure because of that capacity to reinvest, and we have this beautiful portfolio of brands. And they have the capacity to suffer. So for example they had global leadership in coffee, in Nescafe. On top of that they identified the single-serve coffee business as very on-trend because of the increasing number of people who live alone and who also want to have choice and variety. So it�� no longer enough to brew a pot of Maxwell House for 10 people because you have a big family. You��e living alone you want to have variety, you want to have just enough so you don�� waste. Single serve plays a big role in that. And they were willing to invest so heavily behind the development of Nespresso that they didn�� break even for 15 years. So I admired them. They have great domain expertise in coffee. And they have the capacity to suffer, through 15 years of not breaking even, to perfect the product so that by the time it came out it was a true winner. And so with that careful background, today the business does close to $5 billion. And it�� a very solid important franchise. That culture, of being able to take your domain expertise and move from one product to the next and then invest behind it to try to get it right, without rushing to try to show early profits, is at the heart of what I��e learned from these businesses that do it right, as things required to have permanent excellence.
- [By Patricio Kehoe]
The first on the list is The Coca-Cola Company (KO), in which Citadel disclosed a $267 million stake with over 6.46 million shares. The Coca-Cola Company is the best global brand (in terms of brand equity) and the world麓s largest producer of soft drinks. The company sells products in more than 200 countries and owns or licenses more than 500 brands. It operates in a highly competitive industry with PepsiCo (PEP), Nestle (NSRGY), Groupe Danone (GPDNF), Kraft Foods (KRFT) and Dr. Pepper Snapple Group (DPS). Due to this, the firm's strategy is to use its brands and financial strength to achieve long-term growth. Additionally, it has created an extensive and well-organized global distribution system, which cannot be replicated by any of its competitors at least at a reasonable cost. It has a proven commitment to returning cash to investors, with a current dividend yield of 2.94% which is considered quite good to protect investors' purchasing power.
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