However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.          

Of the 106 stocks listed under "food & beverage" in the CAPS' screener, more than a handful carry well-respected four- and five-star ratings. Those accolades signal our 170,000 CAPS members' confidence that these stocks will beat the market in the months ahead. Let's see what members are saying about the ones below:


CAPS Rating Today

Recent Price

52-Wk Price Change


5-Yr. Growth Rate

AgFeed Industries (Nasdaq: FEED)





Coca-Cola (NYSE: KO)





Dean Foods (NYSE: DF)





Source: Motley Fool CAPS; Yahoo! Finance.

The markets have been on a rollercoaster ride lately, but CAPS food & beverage stocks have matched the S&P 500's 13% year-over-year rise. Let's take a closer look at why investors think some of these other companies won't be jumping from the frying pan into the fire, now that the markets are roiled again.

Some spring in its step
Chinese hog farmer AgFeed Industries continues to face problems associated with the 31 hog farms it acquired several years ago, and the writedowns it's taken over the past few quarters led to losses this time around. The flash floods the country suffered through last year haven't helped, either.

AgFeed is hoping that another acquisition it made, U.S.-based pork processor M2P2, will help it introduce Western-style hog farmer practices. That could be an expensive learning process, as the company tries to compete against Smithfield Foods and Tyson Foods. But AgFeed's new president, who recently led McDonald's international expansion team, should help them in this new environment.

CAPS member CopyCatAmalgam remains worried about rising commodities costs pinching AgFeed's ability to generate profits:

if food prices continue to rise, pork consumptions seems set to diminish. also what about the costs? with increasing grain prices, the cost of production will be higher.

Let us know how you feel on the AgFeed Industries CAPS page then add it to the Fool's free portfolio tracker to see if it ends up hogtied by its acquisitions.

No refreshing pause needed
Coca-Cola achieved a milestone recently: For the first time ever, its Diet Coke edged out the signature beverage of rival PepsiCo (NYSE: PEP) to claim the No. 2 spot on the list of best-selling beverages. Both Coke and Pepsi have four drinks each in the top 10.

Yet this is more of a public relations coup than anything else, since volumes of Diet Coke actually fell from the year before. Pepsi's volumes simply fell even more. The year before, they had been virtually even, so Pepsi's bigger drop allowed Coke's diet drink to step ahead. Coke still owns the market with a 42% share; Pepsi comes in second at just more than 29%, while Dr Pepper Snapple Group (NYSE: DPS) ranks a distant third at 16%. As we noted yesterday, though, that No. 3 showing still represented a big leap forward for the drink maker. Everyone else, even combined, just isn't even close.

With Coca-Cola trading at new 52-week highs, CAPS member jdavis4982 sees more upside in the beverage company's future:

Based on [Coke]'s long-term track record, I am estimating that EPS will grow at a rate of 8% annually over the next decade. The mean EPS estimate for 2010 is $3.50. Assuming 8% annual growth, EPS will be $7.54 in 2020. I am further assuming that given [Coke]'s superior economics it deserves a P/E of 20, if fully valued. Its median P/E over the past decade has been 21. That would give [Coke] a price of $150.80 in 2020. Using a discount rate of 7%, the present value of KO's stock is $76.67.

Add Coke to your watchlist to see whether its stock bubbles up from here.

Milking the private sector
The milk business is not noted for its generous margins, and rising commodities costs have pressured dairy farmers' ability to survive. As part of the consolidation under way in the industry, Dean Foods, one the country's largest dairy providers, purchased tiny Foremost Farms in 2009, a move it said would help Wisconsin dairy farmers maintain a stable outlet for their milk.

The Justice Department disagreed, and pursued Dean for reducing the competitive field from four dairies to three. After initially opposing this move, Dean Foods realized it was simply cheaper to acquiesce than fight; it will now sell the farm. Whether someone else comes in and buys it remains to be seen.

The Justice Department's intervention doesn't undermine CAPS member ScryingPool's thesis that Dean Foods remains an undervalued company:

Dean has quantifiably increased sales via the expansion of their recently acquired brands like the organic milk "Horizon" and via variant introductions (i.e. flavors) for existing brands like "Silk". Revenues have increased despite sub-par milk prices and overall lack of market equity in the dairy sector.

The ball's in your court
Many factors go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to rebound higher.

Coca-Cola is a Motley Fool Inside Value recommendation. Coca-Cola, McDonald's, and PepsiCo are Motley Fool Income Investor choices. Motley Fool Options has recommended a diagonal call position on PepsiCo. The Fool owns shares of Coca-Cola, Dean Foods, and PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 

Fool contributor Rich Duprey owns shares of Dean Foods, but he does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.