Monday, August 16, 2010

Crazy to Invest In Food Right Now?

Money Burger
Money Burger To Go

I’m so hungry I’ve gone crazy. Crazy to buy some food stocks this week when it looks to me like the DJIA, SP500, and Nasdaq are all getting ready to take a big digger down. I can’t believe I’m going to try this, but I am because this is one market everyone around the world needs to live . . . food. Whatever rational that is I don’t know, but I’m putting a buy recommendation on these two food companies based on low-risk high-reward trade setups this week anyway as crazy as it may seem to some. Corn Products International Ticker CPO, and Sysco Corp Ticker SYY.

Everyone Has To Eat To Live Survive and Prosper

I can only hope they don’t follow the broad market if the USA indices take a big downside hit as I’m suspecting. I’m betting on the hope that other traders and investors will buy these stocks because they and everyone else thinks that we all have to eat to live and survive and they will buck any downtrend in the broad market, and put some money into them. If there’s ever a time to stick to stop-loss, this trade plan below is the one for sure. Hopefully the wheat crisis in Russia will help keep driving up food and food company prices at least short term to profit from a swing trade here. Breaking even would even be nice too. Crazy huh? For those that are bulls and food bulls then this might be some crazy analysis you’re looking for to go long. A current bear recommending some buy long positions this week.

Investment Research

After doing a little research on these two companies, for what it’s worth, I found that Zacks Investment Research has a “strong buy” rating on both these stocks. Well that’s little more comforting, but what about the broad market? Most stocks follow the broad market. If the indices tank as I and many others are looking for anytime now, then its stop-loss time on these trade plans if these stocks decide they’re going to follow. Hopefully there’s enough money out there that needs some shelter and food for a little awhile to park some money in these stocks for these trade plans to work out for any amount.

Stock Scans and Screens

These two food companies both showed up on my stock scans this Monday morning as low-risk high-reward buy long positions as well as a bunch of short sell candidates too. If there was only one, I wouldn’t have paid much attention, but with two of these food stocks showing up on the radar screen suggesting they could buck the current downtrend, I became more interested, and more willing to take the buy long bet here. I still think I’m crazy to buy long on any stock in these market conditions right now, but maybe this will work out. To keep your risk low on this trade plan, buy lightly and stick to stop-loss. If the trade plan works out, you can buy more as the price momentum picks up.

Buy Long Corn Products International – Ticker CPO

Buy Entry: 32.85 Upside Breakout

Stop-Loss: 31.42 to 30.22 or No More Than 8% from Your Entry Price

Take Profit Targets: 36.84 to 37.87, 39.23 to 40.33, 44.20 to 45.21, 50.60 to 52.05

Buy Long Sysco Corp – Ticker SYY

Sysco is reporting Earnings this Monday so you may want to wait for the release to take a position.

Buy Entry: 29.80 to 30.35

Stop-Loss: 29.35:

Take Profit Areas: 31.78 to 32.17, 33.05 to 33.44, 35.47 to 35.94, 37.20 to 37.63

Click here to review different investing trading software that scans analyzes stocks for different technical criteria, and trade pattern setups.

Click the Corn Products International and Sysco stock charts below for a larger views.

Stock Chart Corn Products International
Corn Products International Company Profile

Corn Products International, Inc., together with its subsidiaries, manufactures and sells various food ingredients to food and industrial customers in North America, South America, Asia, and Africa. It offers food ingredients and industrial products derived from wet milling, and the processing of corn and other starch-based materials. The company provides sweetener products, including fructose corn syrups, glucose corn syrups, maltose corn syrups, dextrose, polyols, maltodextrins, and glucose and corn syrup solids; and starch products, such as industrial and food-grade starches. It also offers refined corn oil to packers of cooking oil and to producers of margarine; salad dressings; shortening; mayonnaise; and other foods. In addition, the company provides corn gluten feed that is used as protein feed for chickens, pet food, and aquaculture; and steepwater, which is used as an additive for animal feed. Corn Products International offers its products to various industries, including the food and beverage, pharmaceutical, paper products, corrugated and laminated paper, textile, and brewing industries, as well as animal feed and corn oil markets. The company was founded in 1906 and is headquartered in Westchester, Illinois.

Stock Chart Sysco Corp
Sysco Company Profile

Sysco Corporation, through its subsidiaries, markets and distributes a range of food and related products primarily to the foodservice industry in the United States. It distributes a line of frozen foods, such as meats, fully prepared entrees, fruits, vegetables, and desserts; a line of canned and dry foods; fresh meats; dairy products; beverage products; imported specialties; and fresh produce. The company also supplies various non-food items, including paper products, such as disposable napkins, plates, and cups; tableware comprising china and silverware; cookware consisting of pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. Sysco Corporation offers its products to restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, lodging establishments, and industrial caterers. As of June 27, 2009, it operated 186 distribution facilities serving approximately 400,000 customers. The company was founded in 1969 and is headquartered in Houston, Texas.