Food Stocks May Be Worth a Nibble Here

The good action in the food group, especially General Mills (GIS - commentary - Cramer's Take) -- whose CEO I just had the pleasure of interviewing -- is signaling the belief that:

1. the recession will be deep,
2. the grains have peaked, and
3. they are hedged well enough that they can still meet profit growth.

I disagree with 1 and 2, but I do believe that 3 is in play. When I see the rally in GIS and Pepsi (PEP - commentary - Cramer's Take) and Coke (KO - commentary - Cramer's Take) and the smart moves by ConAgra (CAG - commentary - Cramer's Take), I am emboldened to think that Kellogg (K - commentary - Cramer's Take) and Heinz (HNZ - commentary - Cramer's Take) will play -- ha! -- catch-up and that they can be bought.

These are big, worldwide companies and the two that are doing among the best are actually largely domestic: Pepsi and GIS. I think that Heinz and Kellogg -- perhaps the most overseas-oriented save KO -- are going to surprise nicely next time around.

The amazing thing about this group is that there has been virtually no consolidation for many years, just spinoffs that have been disasters for the targets spun, and divestitures like we saw from ConAgra.

I think that could change, too. If the dollar bottoms, Nestle would be nuts not to take action. Further, I believe that Kraft (KFT - commentary - Cramer's Take) has to do something to reignite growth, and it would be a natural to try to merge with someone.

I like the fact that these stocks finally have some spring to their step even though it should have happen months ago.

It is a good place to be in light of the quarter's currency and the hoped-for consolidation even though I think that the recession will be over by the end of the year.

At the time of publication, Cramer had no positions in the stocks mentioned.

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