Your Food-Inflation Action Plan

Shah Gilani Sep 20, 2021

There is a national issue at hand today that is staring you in the face every time you enter a grocery store: food prices are rising, and they won’t stop any time soon.

I’ve addressed this a few times before, including a piece I wrote back in August that I still stand by today (you can read that here) that explores some of the reasons why food inflation is hitting us so hard.

In the time since, food prices have hit new highs due to inflation. Over the past two years, food costs rose 16%, which is particularly noticeable in the meat and dairy aisle of your local grocery store. Beef, chicken, pork, fish, and eggs are all up in price.

This is a major trend – one that I’m watching closely so I can pinpoint the best investments and strategies that you can use to counteract the attack on your wallet every time you buy food.

This week, I’ve got a three-part action plan that, if my predictions are correct, could be the best plays on the market right now.

#1 Tyson Food Inc. (NYSE:TSN)

This is a global food company that operates in four segments: beef, pork, chicken, and prepared foods. Each is and will be deeply affected by food inflation.

Back on August 9, they reported strong revenues that beat analyst estimates by 20%, breaking the ten-billion-dollar milestone to score $12 billion in their third quarter.

In response, the stock price shot up as much as 14.96% within four days of the announcement.

But, since then the prices have come back down in what I anticipate is a consolidation before a move even higher.

If shares of TSN close above $77.10, I like buying the stock, outright, and buying-to-open the TSN January 21, 2022 $77.50/$80 Call Spread for $1.15 or less.

#2 Conagra Brands Inc. (NYSE:CAG)

CAG creates and ships groceries, snacks, and frozen goods, among other things. The company sells its products under many brand names with Slim Jim, Earth Balance, and Healthy Choice as the most recognizable.

They also beat consensus for their most recent quarter, making over $2 billion in revenue. The only problem is it fell short of yearly estimates, which led to a stock value drop of 10.24%.

But I don’t think that downturn is any reason to avoid this stock. It’s positioned well to turn a profit over the next few months, if not years.

The stock has reformed a tight base, which I like a lot, and it looks as if the stock could push even higher when they report earnings again on October 7. I fully expect it to beat estimates once again.

And if that happens, here’s what to watch for.

If shares of CAG close above $33.90, prior to October 7, 2021, I like buying the stock, outright, and buying-to-open the CAG December 17, 2021 $34/$35 Call spread for $0.45 or less.

#3 Nestle S.A. (OTC:NSRGY)

This company is a $336 billion behemoth with global operations producing food and drink, giving them exposure to inflation around the entire glove.

Earlier this year, the stock has a solid three-month run (from March 2021 to May 2021) that saw shares gain nearly 22%. Since then, though, the stock has been trading in a sideways base (since mid-May 2021) and now, it’s trading right at key support levels of $123.00.

Here’s what I’m watching.

If NSRGY bounces off support and closes above $128.00, I like buying the stock outright.

And that won’t be the end of our food inflation run. I’m still eyeing this trend as it develops and there’s a strong chance I’ll be back later this week to bring you more food-plays.

Until then…

Cheers,

Shah

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