STOCKTON, Calif. ( TheStreet) -- Diamond Foods ( DMND) bought its way into the name brand ranks with its purchase of the Pop Secret popcorn business from General Mills ( GIS) in September 2008. The $190 million deal diversified the nut producer's line-up and made the stock an appetizing buy.

Before the acquisition, the Stockton, Calif.-based company was best known for its Emerald Nuts products. The nuts gained popularity with the help of quirky commercials featuring the late actor Robert Goulet and anagrams such as "evil ninjas love Emerald Nuts." Retail sales of Diamond products rose 26% in the company's most recent fiscal year, which ended in July.

Diamond is fairly priced and has its eyes on growth. Its shares have soared 58% this year, outperforming the 30% gain of the S&P 600 Consumer Staples Index. The stock is positioned to keep climbing as the economy improves, but it won't fall apart if there's a pullback.

The Pop Secret acquisition gave Diamond a reliable source of cash flow that could help the company expand its nut business or add new products. Even though the company increased its debt by $125 million in fiscal 2008 to fund the purchase, it still has a solid financial position with $24 million in cash and a current ratio of 1.47.

Analysts expect the company to boost earnings 21% to 81 cents a share in the quarter that ends in October. They're projecting 4% revenue growth for the fiscal year that ends in July 2010 and an 8.6% increase for fiscal 2011.

Diamond has a beta value of 0.4, which indicates that the stock is only lightly correlated with the broader market. Stocks with lower betas are more likely to gain when the market declines, making them a hedge against widespread drops.

While food stocks like Diamond Foods, General Mills and Kraft Foods ( KRFT) are unlikely to explode in an economic turnaround, they can help diversify portfolios and offset losses. If we experience another dip before the sustainable rally investors are predicting, a stock like Diamond would be a safe bet. We rate the company "buy."

-- Reported by David MacDougall in Boston.
Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.