NEW YORK (TheStreet) -- In any time of deflation it’s a company that can absorb cost decreases and maintain prices that comes out on top.

In other words, middlemen, distributors and processors of raw materials.

This turns out to be as true in the food business as in any other. I noted Thursday that stock in grain processor Archer Daniels Midland (ADM) - Get Report, for instance, has been on a tear since the trend in grain prices turned down this spring. Don’t like ADM? Then consider Ingredion (INGR) - Get Report, formerly called Corn Products International. The stock is up 14% this year and still carries a 2.15% yield.

Since neither ADM nor INGR farm, they are not hurt by falling commodity prices. They also don’t sell at retail, enabling them to retain some pricing power and limit marketing costs. If ADM and INGR were in the oil patch they would be refiners. If they were in cars they’d be parts companies. If they were in technology they would be chip companies.  

In a deflationary time the middle is the sweet spot. Jim Cramer, for instance, has been pounding the table for companies in the natural foods business, where a reputation for quality can overcome pricing pressure. But that’s not working in the retail end, where Whole Foods Market (WFM) is down by one-third so far this year, or in branded items, where Annie’s (BNNY) is down 31%. It’s only where you’re a supplier of an essential ingredient that you seem able to maintain pricing power this year.

SunOpta (STKL) - Get Report, for instance, might be seen as a mini-organic ADM, producing “milk” from soy, almonds and rice, as well as snacks, nuts, nutrition bars and more. Its market cap is under $900 million but the stock, at around $13.50, is up 35% so far this year.

Here are some of the food industry’s other winners in 2014:

Sysco (SYY) - Get Report is a major distributor to food service, including hotels, hospitals, schools and restaurants. The stock beat estimates on its most recent earnings release, with earnings of 50 cents per share and sales of $12.287 billion. The shares, at $37.45, are only up around 4% for the year but have been on a tear this month as the fall in grains has become more obvious.

ConAgra (CAG) - Get Report has also been rising since the move down in grains became pronounced a week ago. It’s a processor of packaged goods whose brands include Chef Boyardee, Marie Callender’s, and Healthy Choice, although it also packages under private labels. The company is in the process of buying back debt and, while it suffered a small loss for the quarter ending in May, it generally brings about 5% of sales to the net income line. It may provide a positive earnings surprise. At close to $32, shares are down nearly 6%.

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Treehouse Foods (THS) - Get Report makes a variety of products sold through food service or on private labels. The company has been following the “natural” trend this year by buying natural food producers, like Protenergy and Flagstone Foods. So far this year the stock, at $80.70,  is up 17% for the year to date, with a top-line that usually grows over 10% per year and the ability to push 3% to 4% of that to the bottom line with a reducing debt load.

What’s good for investors about all these stocks is that even if you’re wrong about their rising, you are unlikely to see a precipitous fall. Food processing is a solid niche, it’s something people are always going to need. While deflation usually takes a bite out of stock prices, the middle may be your best place to be for capital preservation.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

TheStreet Ratings team rates CONAGRA FOODS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONAGRA FOODS INC (CAG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CAG, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CONAGRA FOODS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CONAGRA FOODS INC reported lower earnings of $0.68 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.26 versus $0.68).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 268.7% when compared to the same quarter one year ago, falling from $192.20 million to -$324.20 million.
  • The share price of CONAGRA FOODS INC has not done very well: it is down 16.31% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
  • Currently the debt-to-equity ratio of 1.71 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CAG has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity needs.