Ralcorp Holdings (RAH)

One trend that I think we will see is a reduction in expenditures by a stressed consumer on expenses such as casual dining. This should be beneficial for grocery stores, WalMart, and Costco, but also for Ralcorp, which is one of the leaders in private-label food brands.

In addition to cutting back on casual dining, consumers can also be expected to look for alternatives to name brands. Ralcorp is in a unique position to take advantage of this trend, and is a way for the investor to participate and also avoid the competitive grocery sector.

Safeway recently reported their latest quarterly earnings, which were below expectations, and noted that one reason was because sales of private-label goods was higher than expected.

P/E is modest at just 14, and stock is down about 20% over the last year, probably because of higher than expected input/commodity expenses, but these costs will eventually be passed on via higher prices and the current price of $54 appears to be a good entry point for the investor to take advantage of what looks to be a long term trend.

Chicago Tribune Article about Buffett & Berkshire

Today's Chicago Tribune has a nice article about Buffet's view on the economy and the short term prospects of insurance premiums and insurance company earnings. I think his most interesting comments are what he says about the risk of stagflation and his view that the economy may not recover within the next year.

This is a link to the article: http://www.chicagotribune.com/business/chi-mon-buffett-0707-jul07,0,6682432.story