Four Fabulous Food Stocks for Investors

Looking for stocks that are more likely than the average stock to be higher one year from now? All of the stocks in today's discussion are not only among the higher ranked stocks that investors should consider, but also all come from an industry that is likely to be among the top performers in a year's time.

When it comes to investing, picking the best stocks in the best industries is one of the smartest moves an investors can make. While it may seem obvious that investors want to be in the best stocks, it might be less obvious why it matters what industry those stocks come from.

Consider this: the average industry has provided average annualized returns of approximately 14.61% since 1995. Not bad--certainly if you pick a good stock in that average industry.

But the top-rated industry, the industry with a PowerRating of 10, has outperformed the average industry by a sizable margin. Our research shows that 10-rated industries since 1995 have produced average annualized gains of more than 35%, more than double that of the average industry.

By picking high PowerRating stocks that come from industries that also have a high PowerRating, investors can have the "wind at their backs" going forward.

Because the best stocks in the best industries tend to outperform all other stocks as a class, investors to stick to this method of using PowerRatings to guide their investment decisions will likely outperform other investors--whether the stock market is in a raging bull market or a weak, meandering bear market.

All of the stocks in today's discussion have PowerRatings of 9. This makes all four stocks part of that group of "best stocks" that investors should be focused on. Stocks like these, stocks with PowerRatings of 9, have been higher one year later more than 79% of the time. Compare this to the reliability of the average stock, which has been higher one year later less than 68% of the time. Not only are 9-rated stocks more reliable than the average stock, but also stocks with PowerRatings of 9 have outperfomed the average stock. Based on our research looking at thousands and thousands of simulated trades since 1995, 9-rated stocks have averaged gains of more than 18% in one year's time. By contrast, the average stock has gained between 12-13% after one year.

Let's meet the stocks:

Maker of Pop Tarts, Frosted Flakes and Special K, Kellogg (K@K | Quote | Chart | News | PowerRating) is one of the leading cereal and snack food makers in the world. Kellogg trades at a P/E of 17.60 and recently fell below its previous 52-week low of $48.26.

J.M. Smucker (SJM@SJM | Quote | Chart | News | PowerRating) is a major manufacturer and distributor of its own brand of jams, jellies and preserves--as well as other items such as peanut butter and ice cream toppings. The stock trades at J.M. Smucker trades at just under 15 times earnings and as of late was trading within cents of its 52-week low of $44.88.

Lovers of baked goods aren't the only ones who love Sara Lee (SLE@SLE | Quote | Chart | News | PowerRating). Investors looking for quality, high PowerRatings stocks may find something attractive in this maker of cakes, cookies and other baked treats. In addition to their trademark baked goods, Sara Lee also makes non-consumable products for personal, air and shoe care. The stock trades at a P/E of 27.70 and just slipped below its 52-week low of $14.31. Sara Lee also has a dividend yield of 2.90.

Last but not least is Pepsico (PEP@PEP | Quote | Chart | News | PowerRating). Once thought of only as the also-ran in the Cola Wars, Pepsico has developed a number of strong brands that can stand up next to any other brands in their category. These brands include Pepsi brand soft drinks, of course, but also Frito Lay snacks, Tropicana fruit juices, Quaker oats cereals and Gatorade sports drinks.

Pepsico trades at just a few cents above 19 times earnings, and is just inside the lower half of its 52-week price range from $79.79 and $61.89.

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