Yummy Recession Food Stocks

If the market has indeed bottomed out, look for gains among the stocks of some packaged-food producers, say the analysts at Credit Suisse. That assumes that the recession will deepen even as the stock market evens out. As consumers increasingly eat at home to save money, sales of packaged foods should rise, the analysts said in a note Monday. In fact, that's already happening.

And the firms Credit Suisse examined -- General Mills, Kellogg, and Heinz -- will especially prosper if commodities prices continue to decline. That's because, for the most part, they've been able to maintain, or even increase, their margins.

"In the recessionary period of the 1970s," the analysts wrote, "these companies enjoyed margin expansion and outperformed the broader market when commodity prices were declining, but the broader economy was weak. In other words, they generally held on to the price increases they had taken while enjoying the benefit of slightly lower input costs."

That's a big assumption, though. Many economists expect prices of food commodities to rise again because the underlying economic forces -- rising demand from developing nations, ethanol producers and others -- are still in place.

Still, at least in the short run, margins should improve. Once consumers are in the grocery store, more of them are choosing cheaper store-brand products. But that trend likely won't hurt these producers much because so far, that trend "has not been enough to offset the bigger positive of consumers simply eating more at home."

Meanwhile, "lower-quality names" such as ConAgra and Sara Lee won't do as well because their product mix doesn't afford the same kind of pricing power, the analysts said.