Credit-Card Companies Charge Higher

Is the consumer really extinct? Not judging by the price action of many of the consumer credit companies powering higher. Visa (V), American Express (AXP) and MasterCard (MA) notched new yearly highs Monday, despite the dour news that U.S. unemployment hit a 26-year high and the fact that many consumers continue to cut their borrowing. According to the Federal Reserve, revolving credit dropped at an annual rate of 13.3% in September. Surprisingly, the news only seemed to help credit-card stocks.

Charge!

Discover Financial Services (DFS) vs. Visa (V), MasterCard (MA) and American Express (AXP) – 1 year

Those hesitant to pile into Visa or MasterCard at current levels might consider Discover Financial Services (DFS), which normally correlates with the larger players but has recently lagged. The $8 billion firm trades at roughly half of its 2007 IPO price and yields 0.6%.

A few months ago we highlighted PowerShares Dynamic Food & Beverage Portfolio (PBJ), a.k.a., the “food fund,” which has since motored higher with holdings such as Del Monte Foods (DLM), Fresh Del Monte Produce (FDP) and General Mills (GIS). Other food-related names such as Kellogg (K), J. M. Smucker Company (SJM) and Hormel Foods (HRL) have also been strong in recent weeks.

One lesser-followed idea within the sector that features a unique niche is Hain Celestial Group (HAIN), which manufactures 42 separate brands focusing on natural and organic offerings. In addition to its namesake teas, the company’s products include Rice Dream non-dairy beverage and Arrowhead Mills baking products. My personal favorite is the Terra Chip line of gourmet potato chips.

The company has a particular focus on gluten-free products, a market which has grown at an annual rate of 28% since 2004 and is expected to exceed $2.6 billion by 2012. Earnings per share, released last week, grew 17.6% over 2008 levels.

At the height of its popularity and brand-buzz in 1994, Quaker Oats bought Snapple for a weighty $1.7 billion. With the popularity for natural and organic foods still on the rise, even amid a generational recession, Hain is one idea to consider putting on your plate.

Maybe it’s time for turkey futures? While there aren’t yet any contracts allowing home cooks to hedge their exposure to rising turkey prices, perhaps the Chicago Mercantile Exchange (CME) or another enterprising outfit might consider a listing. Prices have risen from $1.01/pound in 2007 to $1.46 today, a jump of some 44%, meaning that consumers should expect to pay more this year for their traditional holiday bird.

USDA Frozen Whole Turkey Prices

Source: USDA, Rosewood Research

As our national belt tightening continues, this might be the year to fill up on stuffing and sweet potatoes: tasty, filling and cheap in any economic environment.