6 Food Stocks That Could Rise

NEW YORK (TheStreet) -- Dole Food Company (DOLE), Green Mountain Coffee Roasters (GMCR) and Fresh Del Monte Produce (FDP) are among food-related stocks that could see significant gains in the next year, according to analysts.

Although most asset classes got hammered during the recent market slump, the majority of contracts on grains and soft commodities on the Chicago Mercantile Exchange held firm, clearly indicating that this commodity sector is structurally sound and could remain firm in the long term, driven by demand from emerging markets.

Analysts at Goldman Sachs recently upgraded their forecasts for CME crop futures, saying that they expect agricultural prices to outperform the rest of the commodity complex.

Meanwhile, corn prices have more than doubled in a year, while wheat increased greater than 70%. Coffee and sugar prices soared more than 50%. Industry analysts believe that the current scenario is fueling the early stages of a soft commodity supercycle, fed by growing demand from the emerging markets.

As per the International Coffee Organization (ICO), world coffee production in the current 2010/2011 crop year reached 133.3 million bags, increasing 8.2% from the prior crop year. Although top producer Brazil estimates a decline in its coffee output, the ICO believes that the impact of the decline in Brazilian production would be offset by Colombian output, after two crop years of low production.

We have selected six soft commodity-related stocks that could rise from 6.6% to 41%, based on average 12-month price targets of analysts surveyed by Bloomberg.

We have listed the stocks in ascending order of potential upside, based on analysts' price targets.

6. TreeHouse Foods ( THS) produces nondairy powdered coffee creamers, private-label soups, salad dressings and sauces, sugar-free drink mixes, hot cereals, macaroni and cheese, and skillet dinners.

For the second quarter of 2011, sales increased to $492.6 million from $446.2 million in the year-ago quarter. Sales from the North American Retail Grocery segment increased 14.1%, while the Industrial and Export segment reported growth of 7.2%. Net income for the quarter stood at $14.3 million, or 39 cents per share.

For the third quarter of 2011, the company has reaffirmed its adjusted EPS guidance of 80 cents to 85 cents. For 2011, the adjusted EPS range is estimated between $2.90 and $3.00. The company adds that it has recovered a significant portion of its margin shortfall resulting from input costs and transportation.

Of the 17 analysts covering the stock, 41% rate it a buy, and the rest rate it a hold.

The average 12-month price target of analysts polled by Bloomberg is $58.58, 6.6% greater than recent levels.

5. Starbucks ( SBUX) is the world's leading roaster and retailer of specialty coffee with operations in more than 50 countries. The company conducts its business through three segments: U.S., International, and Global Consumer Products Group.

Total revenue for the third quarter of 2011 was reported at $2.9 billion, increasing 12.3% from the year-ago quarter. Net earnings stood at $279.1 million, or 36 cents per share, up 34.2% from $207.9 million, or 27 cents per share, in the same quarter a year earlier. The company's operating margin improved 300 basis points in the U.S. and 200 basis points in the international segment during the quarter.

The company recently introduced a more convenient online shopping experience by redesigning StarbucksStore.com. With its growing digital presence, the company expects to attract and connect with more customers in unique ways. Besides, SBUX recently acquired 100% ownership and operating control of Starbucks Coffee Switzerland and Starbucks Coffee Austria.

The company will pay a dividend of 13 cents per share on Aug. 26, 2011. For 2011, SBUX expects its new-store count to reach 600, with 100 in the U.S and the remainder worldwide. Earnings per share are expected to range from $1.50 to $1.51, topping the earlier estimate of 15% to 20% growth. Revenue for the year is estimated to grow by about 10%, led by comparable store sales growth at the high end of its target range of 3% to 7%.

Of the 26 analysts covering the stock, 62% rate it a buy and the rest rate it a hold. There are no sell ratings on the stock.

The average 12-month price target of analysts polled by Bloomberg is $45.47, 16.9% greater than recent levels.

4. Caribou Coffee Company ( CBOU), a majority-owned subsidiary of Caribou Holding company, runs coffeehouses in the U.S. It has 534 coffeehouses, including 121 franchised locations. The company operates in three segments: retail, commercial and franchise.

Sales for the second quarter of 2011 stood at $80.3 million, increasing 16.5% from the year-earlier quarter. Net income for the quarter was $4.4 million, or 21 cents per share, as against $2.4 million, or 12 cents per share, in the corresponding quarter of 2010. Commercial and franchise sales for the quarter soared 81.8%, while comparable coffeehouse store sales grew 4.6%.

The company recently announced a partnership with CROSSMARK, a leading sales and marketing services company in the consumer packaged goods space, to support the expansion of its packaged coffee business. Besides, Caribou announced that its holding company is offering for sale 5.15 million shares of common stock through an underwritten public offering.

The company has raised its full-year guidance for net sales to a range of 11% to 13% from the earlier 7% to 9%. Meanwhile, diluted earnings per share on a pro-forma basis are expected between 39 cents and 41 cents, compared to the earlier forecast of 35 cents to 37 cents.

Of the six analysts covering the stock, five rate it a buy.

The average 12-month price target of analysts polled by Bloomberg is $18.50, 17.5% greater than recent levels.

3. Fresh Del Monte Produce, a holding company, is a vertically integrated producer, marketer and distributor of fresh and fresh-cut fruit and vegetables, prepared fruit and vegetables, juices, beverages and snacks in Europe, Africa and the Middle East.

The company recorded net sales of $1.04 billion for the second quarter of 2011, compared to $1 billion in the year-ago quarter, riding on higher selling prices across all the segments. Net income increased to $35.2 million, or 59 cents per share, compared to $21.2 million, or 34 cents per share, in the year-ago quarter. For the quarter, gross profit increased by $12.2 million to $103.7 million. As of July 1, 2011, cash and cash equivalents stood at $55.1 million, vs. $26.5 million recorded at July 2, 2010.

The company's board of directors recently approved raising the company's regular quarterly cash dividend to 10 cents per share from the earlier 5 cents, payable Sept. 9, 2011, with an ex-dividend date of Aug. 15, 2011.

Of the seven analysts covering the stock, one rates it a buy and six rate it a hold.

The average 12-month price target of analysts polled by Bloomberg is $27.33, 20.5% greater than recent levels.

2. Green Mountain Coffee Roasters engages in the specialty coffee and coffee-making business with two operating segments: Specialty Coffee business unit (SCBU) and the Keurig business unit (Keurig).

Sales for the third quarter of 2011 increased 127% to $717.2 million from the year-ago period. Net income for the quarter grew to $56.3 million, or 37 cents per diluted share, compared to $18.4 million, or 13 cents per share, in the year-earlier quarter. Since the company's stock offering closed on May 11, cash and short-term cash investments stood at $106.8 million, as of June 25, 2011, up from $64.5 million as of March 26.

While rating the stock medium bullish, a Bedford report cites the company's licensing deals in the past one year to sell coffee refills under nearly all the major U.S. coffee brands, including Folgers, Starbucks and Dunkin' Brand's ( DNKN) Dunkin' Donuts.

For the fourth quarter of 2011, the company estimates consolidated net sales growth of 100% to 105%, while non-GAAP diluted earnings per share are seen at a range of 44 cents to 48 cents. Full-year net sales have been raised to a range of 98% to 100% from the earlier 82% to 87%. Excluding any acquisition-related transaction expenses, non-GAAP earnings per share are forecast between $1.63 and $1.67.

Of the 11 analysts covering the stock, 73% rate it a buy and 18% rate it a hold.

The average 12-month price target of analysts polled by Bloomberg is $121.50, 20.6% greater than recent levels.

1. Dole Food Company operates as a producer, marketer and distributor of fresh fruit and vegetables in three business segments: fresh fruit, fresh vegetables and packaged foods. The company engages in providing wholesale, retail and institutional customers food products bearing the DOLE trademark, worldwide.

Revenue for the second quarter of 2011 was $153 million, up 36% from the year-ago quarter. Net income for the period increased to $83 million from $33 million in the year-earlier quarter. As of June 18, cash and cash equivalents soared to $245 million from $180 million as of Jan. 1. Revenue from fresh fruit increased 12% on improved global banana markets, while revenue from packaged foods and fresh vegetables rose 9% and 4%, respectively.

For the third quarter of 2011, the operating earnings forecast is currently tracking favorably with the corresponding period last year, attributable to the $27 million container arbitration settlement the company received in 2010. For the full year, the company expects significant earnings improvement compared to 2010 levels.

Of the seven analysts covering the stock, 29% rate it a buy and the rest rate it a hold. There are no sell ratings on the stock.

The average 12-month price target of analysts polled by Bloomberg is $16.33, 40.9% greater than recent levels.

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