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Tickers in this Article: DLM, AEO, PSUN, PG, CAT, BONT
In looking at Del Monte Foods (NYSE:DLM) recent earnings release, one can start to see the coming economic landscape in perspective. Despite the strong market rally, all is not well with the real economy. Unemployment is over 10%, but even worse, many don't see it getting below 8% for a couple of years. That's the type of data that will have a long-term effect on many businesses for years. People who are unemployed don't spend money, and those who are employed spend only on necessities out of fear.

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Food Versus Pants
This consumer effect shows up in the long-term outlook for many companies. A majority of businesses are reporting strong third quarter earnings fueled in no small part by federal stimulus programs. But what you want to pay attention to is what the company is saying about the future. The Del Monte Foods Company not only reported record fiscal 2010 second quarter results, but also increased its anticipated net earnings for the year. Compare that with other various business like American Eagle (NYSE:AEO), Pacific Sunwear (Nasdaq:PSUN), Procter and Gamble (NYSE:PG), and Caterpillar (NYSE:CAT). All these names reported strong quarters. But the ones selling food and construction equipment had favorable outlooks, while those businesses selling discretionary goods were revising guidance downward.

Del Monte is one of the largest producers and marketers of food and pet products in the U.S. The company's products are found in 80% of U.S. households and include brands like Del Monte and Meow Mix cat food. That type of business, when well run, can do very well relative to other businesses in times of economic distress. (For further reading, check out Profiting In A Post-Recession Economy.)

Price and Value
Del Monte is forecast to earn nearly $1 per share in fiscal 2010 and the shares trade at $11.50. Alongside a 2% yield, that a very decent multiple for this type of company. And it's even more attractive when you compare what Mr. Market is valuing other different types of business. Bon-Ton Stores (Nasdaq:BONT), a clothing retailer, has no earnings to speak of, a market cap of $226 million against $1.2 billion in debt yet is up over 1,000% this year from its lows. If you were blessed to speculate on this when shares were trading for a buck, enjoy the profits but count yourself lucky for the market rally. Going forward, fundamentals will always outlast speculation. (For related reading, see 4 Tips For Buying Stocks In A Recession.)

The Bottom Line
To be sure, Del Monte's numbers don't automatically qualify it a bargain investment. Rather, the company's results continue to illustrate the sweet spot that businesses catering to essential goods and services will have going forward.

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