Food stocks such as Kraft (NASDAQ: KRFT), Hershey (NYSE: HSY), and The Original SoupMan (OTC: SOUP) continue to provide investors with a solid foundation in the bull market.
With tension around the world, food stocks are proving to be defensive holdings. While that has traditionally been for gold (NYSE: SPY) and now oil (NYSE: USO), food stocks are becoming more attractive to investors. When there are problems, stable assets are sought. People will always have to eat. As a result, a premium is paid for those in that category.
That is shown by Kraft Foods rising more than 11 percent for 2014 (chart below). Over the last year, Hershey’s has jumped by double digits. Both have outperformed SPDR Gold Share, the exchange traded fund for gold, and United States Oil, the exchange traded fund for oil.
The Original Soupman was up in trading more than 3 percent on Friday.
What is also making these stocks attractive is the ability to sell covered call options. Food stocks are ideal candidates for writing covered call options. D. Joseph Louro, an expert on covered call options and head of Investview (OTC: INVU), a financial technology and investor education firm, points out that most options are not exercised. That makes those for food entities even more of a low risk, high reward strategy.
As a small cap, The Original SoupMan has appeal to growth and value investors.
The bull market has not left many blue chips like Kraft Foods, Hershey, or others in the undervalued category for either sales or assets. That is not true for promising small caps like The Original SoupMan however. It has tremendous potential for those look for undervalued small caps in the food sector with tremendous growth potential. The growth and value appeal of The Original SoupMan complements the income features of Kraft and Hershey.
No matter what the objective, writing covered call options or collecting dividend income, there is something for everyone in the food sector!