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The Low-Cow, Mad-Carb Portfolio

It's not often that two contradictory investment themes duke it out in the supermarket of public opinion and taste at the same time. But that's the meat of the matter today in grocery aisles and trading rooms across the country as we witness the battle of Mad Cow vs. Atkins.

In one corner, we have the challenger -- an investment theme fronted by consumers who fear that the discovery of bovine spongiform encephalopathy in a Washington state Holstein shows our protein food chain has been compromised and therefore should be shut down.

In the far corner stands the current champ -- an investment theme fronted by people who believe a diet low in carbohydrates and high in protein, popularized by the late Dr. Robert Atkins, can keep them from getting fat as a pig.

Each theme logically argues against the other. If the beef-bashers are correct, it should be time to take a cue from Japan, Mexico and South Korea -- which have forbidden imports of U.S. beef -- and swap meatpacker stocks for shares of veggie processors like Fresh Del Monte Produce (FDP), or the la-di-da organic grocery chain Whole Foods Market (WFMI). If the beef-eaters are right, then it's time to take advantage of the current fear of frying and buy a lifetime supply of meat stocks.

Of course, there is a middle ground where all can dine and trade in peace, which I will propose in a moment. But first let's examine what's at stake and consider the major players.

Protein Craze Goes Mainstream

The food industry sells close to $600 billion worth of products in the U.S. every year, and beef accounts for an impressive 8% to 10% of that. Tyson Foods (TSN - Get Report), which entered the beef biz in a big way in 2001 by purchasing IBP, slaughters 37,000 cattle daily to keep up the pace of its $10.2 billion division.

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