Action In Food, Coal And Chemicals

New York - Concerns Cropping Up: One of the names we have long recommended in the fertilizer space is Agrium (nyse: AGU - news - people ). The company is involved in the production of agricultural nutrients like sulfur, nitrogen, nitrates, phosphates and potash. The company is also a direct seller of these products, and owns several nitrogen plants.

One of the reasons for our concern regarding Agrium is the recent drop in share prices. The stock price has dropped 30% in the last month, and after a gigantic 1100% gain in the last five years, we are wondering if this may be the end of a glorious run for this stock.

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We still like the fertilizer sector as much as any of the other commodity-related areas, but investors must be aware that AGU has had a huge run. Earnings will be out Aug. 6, and the stock may be setting up for a sell on the news reaction. We think investors that have had a big run in the name may want to just be prepared in the event the reaction may not go so well. Get a game plan ready for your investment. We reduced our rating on Agrium a bit recently, but it still qualifies as a "recommended" name for now.

We will be analyzing the news in the fertilizer sector closely, because we know this is a popular area of interest for investors, and especially for "hot money" traders.

Agrium holds a Dividend.com rating of 3.5 out of five stars.

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Kraft's Profit Whip: Kraft Foods (nyse: KFT - news - people ) reported a nearly 21% jump in sales for this past quarter. The numbers include gains from weaker American currency and from a recent acquisition. The company's sales numbers were also padded by price raises made during the quarter.

Market share losses were an issue for Kraft, which management said was a result of competitors lagging behind in raising prices. We're not sure if this trend's going to change. Kraft management has to realize their cost structure is very high, and the smaller plays may use price as a way to pick up new customers.

For dividend investors, we think buying Kraft Foods under $30 is a good place to start accumulating a position in this food and beverage industry giant. We have decided to include Kraft Foods on our "Recommended" list. Kraft Foods has a dividend yield of 3.68% and has a Dividend.com rating of 3.5 out of five stars.

Profits, Sunny-Side Up: Cal-Maine Foods (nasdaq: CALM - news - people ) was the beneficiary of high egg prices and strong demand for eggs in the most recent quarter. Revenue rose nearly 39% to $235.6 million from $169.9 million.

The company has actually been benefiting from the rising cost of corn, which is used for chicken feed, since it simply passes higher prices onto customers. Lower supply levels have also helped secure better pricing.

Investors need to be aware that the price of eggs can be (and has been) very volatile. This price action can swing Cal-Maine shares very quickly, as the company's bottom line is directly affected by movements up or down, as is its variable dividend. We currently recommend Cal-Maine shares, but we do caution investors to keep a small position here. We would certainly not "put all our eggs in one basket."

Cal-Maine shares yield 8.64%, though dividends paid are based on annual profits. Cal-Maine holds a Dividend.com rating of 3.5 out of five stars.

Chicken Feed Getting More Expensive Than Chickens: Tyson Foods (nyse: TSN - news - people ) reported a big drop in quarterly profit. The company lost one cent per share, well below analysts' consensus forecast for a profit of 12 cents per share. Grain costs in the chicken business were up $140 million in the quarter. Sales rose about 3%.

Beef and pork, which account for about 57% of the company's revenue, were the bright spots, helping offset what would have been an even tougher quarter. Prepared foods, which account for 10% of Tyson's revenue, were affected by higher costs for wheat, dairy and cooking ingredients.

For dividend investors, we think Tyson Foods is not super attractive at its current levels. The stock price is toward the middle of its 52-week trading range of $13 to $22. The dividend yield is .99%, and that is nothing to "cluck" about. We'd re-examine the shares at lower levels.

Tyson Foods holds a Dividend.com rating of 3.3 out of 5 stars.

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Cashing in the Coal Chips: Arch Coal (nyse: ACI - news - people ) is giving investors and "hot" money traders a chance to lock in some profits. The company reported a 30% rise in revenue for the quarter on Friday, and it is also raising its profit estimates to a range of $2.50 to $2.85 a share, from a prior forecast of $2.40 and $2.80 a share. Consensus estimates are for $2.64.

At this point, we believe that rallies in coal stocks are opportunities to lighten up on positions. The global slowdown will begin to hit the commodity areas, and softening oil prices will make coal plays a tough area for investors to make money in.

Arch Coal has a dividend yield of .55%, and is not recommended at this time, holding a Dividend.com rating of 3.4 out of five stars.

Cautious Guidance An Opportunity to Buy: Eastman Chemical (nyse: EMN - news - people ) delivered a second-quarter report that was essentially in-line with what Wall Street analysts had been expecting. The company sees the next quarter as being flat compared to last year's numbers with a slow U.S. economy and rising raw material and energy costs lending the cautious tone. Eastman stock took a big hit.

We think this sell-off may be a mistake, considering the recent Dow Chemical (nyse: DOW - news - people ) offer to buy Rohm & Haas (nyse: ROH - news - people ) for a 70% premium. We consider shares of Eastman Chemical a good risk/reward at these levels. The company also has a 2.68% dividend yield, and it is a "recommended" dividend stock, currently holding a Dividend.com rating of 3.5 out of five stars.