Jon Markman, a veteran money manager and journalist, is editor of the daily trading service, Trader’s Advantage. A pioneer in the development of stock-rating systems and screening software, he is a co-inventor of two Microsoft patents and the author of the bestselling books, The New Day Trader Advantage, Swing Trading, and Online Investing, as well as the recently released annotated edition of Reminiscences of a Stock Operator. Previously, Mr. Markman was a senior investment strategist and portfolio manager at Pinnacle Investment Advisors and Greenbook Investment Management, as well as the founding managing editor and columnist at CNBC on MSN Money. He was also the editor, investments columnist, and investigative reporter with the Los Angeles Times. Mr. Markman won a Gerald Loeb Award for "Distinguished Financial Journalism" in 2002 for his column "Explaining Market Chicanery," and the Society of Professional Journalists’ awards for his 2001 reporting on Enron and the post-September...
These picks from the food and beverage world are taking advantage of undeniable global and domestic growth trends, says Jon Markman of Trader’s Advantage.
How to eat and drink your way to profit. Sounds pretty good? We are talking about that today with Jon Markman. Jon, how do we do that?
Well, you know, if you talk about the great trends of the next ten years, food has got to be one of them. The population of emerging markets, particularly the middle class, is exploding—it will be about 50% larger in ten years than it is today.
So, you can’t really see any other major market around the world that is more impressive than the need for food. And not just food, but better food. When people have more money, they want to buy more proteins, and more proteins means the need for more grains, because the animals are fed the grains.
So you have really a rich group of stocks that you can invest in and feel comfortable holding them for ten years. There are quite a few good names in this group.
We are talking about everything all the way up the top of the food chain—packaged goods makers like Kraft (KFT), which are making fantastic inroads overseas. Then all the way down to the grain level, talking about seed makers like Monsanto (MON), which came down a lot from its high due to a number of scandals, lawsuits, and whatnot that have largely been resolved. I love Monsanto, and that should double over the next couple of years.
Some of the other stocks that I really like a lot include specialty stocks, such as Monster Beverage (MNST). Monster’s old name of the company was Hansen Natural. They make a specialty line of beverages to give people energy, sort of like Red Bull, but it is a domestic brand and it actually has overtaken Red Bull in the United States. They do a tremendous job with marketing.
If you think about why this is a good play, what do people have least of? Time. So what are they doing when they have less time? They are sleeping less; they are more tired. So they are really reaching out to products like Monster and Red Bull, which used to be sort of categorized as youth drinks.
It is really moving into the mainstream, and the middle class is embracing the idea that they could have a jolt in the middle of the day. Since it works quite well and it is actually not harmful to you, I think Monster is going to be one of the great drugs of choice, you could say, for Americans over the next three or four years.
Now you mentioned the grains. Let’s talk a bit just about the commodities. Anything in that particular sector that you are looking at?
You know, with the actual commodities themselves, it is hard to really get a grip on as an equity investor because they are so seasonal. The demand for them waxes and wanes with droughts and storms and whatnot. So I’m not going to make a commodities call.
But the one thing we are sure about is they are going to be on the move. The main way that China gets its grain is from the bread baskets of Brazil, Argentina, and Australia. The best way to play that usually is through the shippers.
The shippers are a company like GENCO Shipping and Trading (GNK), Eagle (EGLE), or DryShips (DRYS). These stocks have been annihilated—they are all down like 90% from their highs of a few years ago, largely because the business was so good back then that a great many more ships were built than the market could stand, and prices of dry bulk shipping collapsed.
Well, just a few weeks ago, dry bulk shipping, the freight shipping prices, went to a multi-year low. Now they are starting to curve back up. I think that as demand for grains increases overseas, we are going to see a lot more demand for these ships, and shipping prices would improve.
So I would definitely take a look, for the risk takers in the crowd, at stocks like GENCO and DryShips and Eagle. One more in that group is Paragon Shipping (PRGN).