Aaron Katsman
IsraelNewsletter.com

The inflation bug has most of us worried. Recently in Israel the CPI was released and showed a 4.7% surge in prices. This is obviously not just a problem in Israel. Throughout the world, inflation, especially food inflation, is alive and well, and has been for quite some time. While at first glance investors might think that food stocks should benefit from higher prices, in practice they have performed poorly over the last few quarters. They have been unable to pass on their higher costs to consumers.
This is why today’s earnings report from G. Willi Food International (WILC), is interesting. For consumers, the earnings report signals more food price hikes coming down the road. For G. Willi, it means a return to strong growth.

Why?

Because commenting on the report, CEO Zwi Williger said, ” Furthermore first quarter’s results demonstrate that we are beginning to regain the momentum that had been building over the past few years as we have been able to successfully pass on some of our costs to our customers.”

The problem that has plagued food stocks of late is that they haven’t been able to pass on costs. The fact that G. Willi has started to do so, potentially could prove to be a big boost to their bottom line.

As for its report, the company showed strong revenue growth aided by recent acquisitions, like Shamir Salads, who produce healthy Mediterranean salads, like Hummous.

While the company refrained from providing guidance for the rest of the year, if we see a drop in the price of food materials, G. Willi could potentially benefit.

Disclosure: Author’s fund has a position in WILC. He has no position in any other stock mentioned as of 5/28/08.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

With people rioting all over the world because of surging food prices, we have started to see a backlash against the cause of the food inflation, ethanol. As global warming alarmists convinced legislators and the media that we need to pour money into ethanol in order to solve the global warming “crisis,” and use it as an alternative to crude oil. So backed by governmentsubsidies, farmers changed their crops over to grow corn, thus creating shortages of other food stuffs and soft-commodities. With smaller supplies, the prices have soared, and now the developing world is taking it on the chin, as citizens are unable to purchase even the most basic food.

What we are starting to see is a backlash against this. The media has started to run stories about the wisdom of ethanol. Better late than never, I guess. The fact that it takes more energy to produce it than it produces. the amount of water used in the process. As if the world is full of spare water.

Hopefully common sense will prevail and we can put an end to the ethanol nonsense. If so, one company that could profit is Ormat Technologies (ORA). The Israelicompany specializes in geothermal and recovered-energy-based power plants. With crude oil hovering around $114/barrel, alternative energy is very much still in focus. But far from a dream, Ormat is a real company with real earnings and real technology. 

The company has been announcing deal after deal and today is no exception. They announced that a Minnesota cooperative agreed to a 20-year electricity purchase agreement with one of Ormat’s units.

Looking for a way to potentially play alternative energy: Forget about ethanol. Do some research and have a look at Ormat. 

Disclosure: Author’s fund holds a position in ORA, he has no position in any other stock mentioned as of 4/16/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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