My theme for 2011 and beyond is the “Need to Feed.” The world’s population continues to grow. The global emerging economies are requiring more food to feed its mouths. However, we are forced to feed more people with less available land and other resources. We have an ever tilting imbalance between the supply of food and the increasing demand.
There are many factors which are impacting our ability to feed people on this earth. Fish supplies are depleting. Volatility in global weather patterns is wreaking havoc on the global grain and commodity markets. A fixed land supply is increasingly sought after between various competitive needs: housing construction, mining and drilling for extractive natural resources, farming and restaurant construction. Add to that the health related issues such as obesity, diabetes and allergies.
As a professional money manager I look at this “Need to Feed” across a spectrum which begins at the farm and ends at your mouth. As a result we have to look at every aspect of the food production: farming, delivery, servicing, retailing, dining, etc. We start on the farm as farmers need to plow, till and seed and fertilize their farms. Next we have to consider companies which take the farm grown crops and then process and package them. Retailers and restaurants sell them to consumers.
As I mentioned, this is not just a domestic game. American casual dining restaurants are finding a home across the globe. KFC and Pizza Hut are growing in China. Pepsi (PEP) and McDonald’s (MCD) are making big forays into Russia. Chipotle Mexican Grill (CMG) is still growing in the USA and is seeking overseas opportunities.
Investing in this space requires an unbiased approach to analysis. We don’t want to invest in restaurants or food stocks that we may personally like to eat or drink. It is not our tastes that are important, it is the consumers’ tastes and perceptions that are paramount. For example, I have never had a sip of coffee in my life. Does that prevent me from analyzing coffee producers or retails? Absolutely not! The reason is simple; we have to look at operational and financial metrics in making an investment decision.
I am a fundamentalist at heart. However, I will not dismiss the technical aspects of investing and will provide charts for those of you who also utilize such tools. My focus is on growth and balance sheet. These are the engines which factor into stock price appreciation. This book will focus on those stocks which have the potential to double in 2011, as measured from their prices as of the end of November 2010. Some of those stocks are in growth mode. Other stocks are older companies which are reinventing themselves. There will also be some stocks which have the potential to be acquired by a larger company.
On a managed basis, our portfolios rose 38.89% in 2010 and 26.10% in 2011. Take advantage of the “Need to Feed” and order my report on 10 Food Stocks That Could Double in 2011.
So sit back with your favorite bag of snacks and beverage and enjoy this look at investment opportunities from the farm to your mouth in 2011.
At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long MCD and PEP stock --- although positions can change at any time.
For more information on investing with LakeView Asset Management, LLC please visit the company's website
You can subscribe to The LakeView Restaurant and Food Chain Report newsletter at Restaurantstox.com
You can purchase 10 Food Stocks That Could Double in 2011 at foodstocksfor2011.com
Posted By Scott Rothbort at January 3, 2011