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Increased Food Safety Awareness - WaveStrength Market Trends for December 20, 2006


This time on the side of the consumer...

by Ann Sosnowski

The pursuit for across-the-board food safety regulatory practices continues… this time on the side of the consumer.

After countless illnesses stemming from foodborne pathogens since August of this year, including the sickening E. coli strain found in shredded lettuce at Taco Bell franchises across the northeast, as well as a Norovirus that sickened patrons at Olive Garden, locally grown produce is getting the thumbs up.

As I've stated many times before, most of our fresh fruits and vegetables come from California… and of the last 23 sicknesses caused by fruits and vegetables since 1995, half have come from California.

Now that more and more consumers are being cautious about buying fresh fruits and vegetables, companies like Whole Foods Markets Inc. (WFMI:NASDAQ) are going to profit…

See, WFMI was the store that first put the spotlight on local farmers. The chain of supermarkets advertises local farmers and food producers in the stores, complete with a picture of the farmer's family.

Even Wal-Mart Stores Inc. (WMT:NYSE) and Kroger Co. (KR:NYSE) are getting the picture and advertising local farmers.

Cited in a BusinessWeek article on this topic, Bruce Peterson, WMT's senior vice president of the Perishable Food Division states that, “Consumers today want to lead a healthier lifestyle, and fresh fruits and vegetables play an important role in that.

While Peterson is no doubt responding to the increase in healthy lifestyles, including low-calorie eating and exercise, this statement also takes on a whole new meaning… considering the sicknesses that mass-produced fruits and vegetables laced with foodborne pathogens have been causing across the country.

WFMI's promotion of locally-grown fruits and vegetables, and its overarching view as a “healthy” supermarket, will continue to propel the chain's success over the next few years. Currently, WFMI is down below $50, a fantastic buy price for a long-term position.

And while WFMI has used its business plan to emit a healthy lifestyle, restaurants are taking it into their own hands to reiterate that their food is also healthy.

According to the Center for Disease Control & Prevention, 76 million people get sick from foodborne pathogens every year… and 5,000 die as a cause.

While foodborne illnesses have declined in recent years at an aggregate from 1996 to 2005, vibrio infections (for example) that are found in raw or undercooked shellfish, have risen by 41%. Restaurants are increasing their testing procedures since the FDA is known to have lost part of its food safety budget, and doesn't test food from its origin of growth.

The National Restaurant Association has created a new produce safety group that will set safety requirements from farm to fork, including harvesting, manufacturing, packing, and processing.

The other day, a friend of mine who works in the food and beverage business alerted me about the worst vegetable or fruit to eat with the highest incidence of making people sick: cantaloupe.

I hate to sound like a hypochondriac, and I know that the rising awareness about these foodborne pathogens is due to increased technology and the ability to get the word out quicker… but I'm a little scared to eat fresh fruits and vegetables.

So I say to you… be careful out there.

My Diligent Investor MicroCap Hot Sheet (formerly WaveStrength Hot Sheet) portfolio includes a position on the number-one independent food safety company.

This company's food-testing equipment is known as the “gold standard” around the world and is used by the USDA to test beef as well as aflatoxin in grain commodities. The company has the fastest, and smartest, handheld tester for fresh fruits and vegetables, which gives toxicity results in a matter of hours.

No doubt, the National Restaurant Association will be using this company's testers in the coming months and years.

To learn more about this pick, my current portfolio, and to get one of the first chances to get in on my latest blockbuster pick (it's a small $0.35 Australian miner that's destroying China's global rare earths supply monopoly), read up in Diligent Investor MicroCap Hot Sheet.