Trend profile: Dean Foods Co.

  • 28 March 2011 |
  • Written by  Skot Kortje, Stock Trends Analyst
  • font size
  • Print

Although a far riskier trade than other big cap consumer staples stocks, Dean Foods may be a nice resurrection project amid other choices.

The Stock: Dean Foods Co. (DF)  Recent price: $10.42

Trend: Consumer staple stocks are weathering producer price inflation and helping defensive-minded investors anchor their equity holdings in a period of market volatility. Although the industrials and technology sectors are showing great resilience while markets digest disruptions from the Far- and Mid-East rocking global stock markets, the consumer non-discretionary sector’s appeal is burnished when economic outcomes, always uncertain, flirt with disaster.
 
This traditionally defensive sector, though, has been subject to increasing input costs as extremely loose monetary conditions have primed global liquidity, fuelling inflation in the goods that fulfil our basic needs. The U.S. producer price index rose 1.6 per cent in February, and has been climbing at an annualized rate of 10 per cent since last autumn. Food stuff price increases are a significant contributor, with raw, intermediate, and finished food prices rising above broader producer price categories.
 
Major food stocks – with some exceptions - seem to be holding up just fine. The Powershares Dynamic Food & Beverages ETF (PBJ-N), conjuring the homey comfort of a peanut butter and jam sandwich in its ticker, remains Stock Trends Bullish even as food inflation has taken hold in the past two quarters. The fund is at a 52-week high and has benefited from the ability of brands like Starbucks (SBUX) and Coca-Cola (KO) to pass on input price increases to consumers, as well as improving profitability at food processors like Heinz (HNZ). General Mills (GIS) joined Kraft Foods (KFT) and Kellogg (K), featured here last month, in the Stock Trends Bullish category last week, while the shares of J.M. Smucker’s (SJM-N) hit new highs. Shareholders of meat producers Tyson Foods (TSN) and Smithfield Foods (SFD) are energized, too.
 
The Trade: Another newly Stock Trends Bullish entry in the consumer staples sector is Dean Foods, the leading U.S. dairy products processor. Its shares bottomed in December at $7.13 after a lengthy struggle with tough dairy market conditions. The stock peaked at the $47 level four years ago. Back then price inflation in corn feed brought on by swelling demand and an ethanol energy policy that displaced dairy farm capacity - as well as monetary factors - had bumped dairy prices considerably, bringing on a flush of milk supply in its wake. Milk prices collapsed from the record levels of 2007. A better prospect appears to be building now, though. The average price of milk that farmers receive this year in the U.S. has improved to about $18.40 per 100 pounds – a 13 per cent increase over last year’s average price and a 43 per cent lift above the 2009 average.
 
Technically, Dean Foods stock offers investors two basic incentives for returning to dairy land. First, its Stock Trends Bullish Crossover generally introduces fairly lengthy bull trends. Also, with the stock price now engaging the 2011 highs that have held back the stock recently, a breakout to a new trading area above $11 is in the offing. Although a far riskier trade than other big cap consumer staples stocks, Dean Foods may be a nice resurrection project amid other choices.
 
 
The Upside: Recent trading volume has been relatively uninspired as the share price consolidates below the prevailing resistance level near $10.75. If the stock is able to advance comfortably above $10.75 it should maintain its relative price performance and make moves toward unlocking investor demand. A fulfilled bullish trend would tip toward a 20 per cent move; perhaps even return the shares to the $14 level they gapped down from in the spring of last year.
 
The Downside:  The cornerstone of a good defensive stock is the security of a dividend. However, this is not a dividend stock. That’s one big notch against this investment for many, even without the risk associated with Dean Foods’ tenuous market fortunes. A drop below $9.50 would indicate the trade has gone sour.
 
back to top

Subscriber Testimonials

  • Stock Trends analysis quantifies nicely the movement of individual stocks. I’ve found that if the technicals are out of synch with fundamental analysis, it is a wake-up call to make a decision. The Stock Trends Bull/Bear Ratio is useful in identifying major market bottoms and tops. It has always presented a good buying or selling opportunity.

    Charles G., Subscriber
  • I have had the good fortune to be reasonably successful and enjoy the investment process. Your process would be recommended for both experts and those who are new to investing.

    Frank I., Subscriber
  • I find your website and research very helpful in my stock trading. I have subscribed to several related services in the past and none present their work with “just the facts” as you. Please keep up the great work so that I can continue to learn! 

    Bryan E., Subscriber
  • I am fascinated with your service and methodology - it is very impressive. [...] Over the years I have concluded that there are many ways to approach stock investing, but once one has chosen a path, one is better off sticking to it.

    Bob E., Subscriber

  • An admitted cynic, it's obviously very high praise when he says he likes StockTrends because of its "simplicity, utility, openness, [and] honesty," and in addition to having "no hidden agenda" is "understandably documented [and] historically verifiable." And, he adds, "It lets me see a lot of things without doing a lot of work." Globe and Mail

    Paul W., Subscriber

  • I am something of a momentum investor. I find Stock Trends useful as I can look at my portfolio as a “watch list” and quickly see where trends are declining in strength or reversing, so it is particularly useful as a tool in portfolio management regarding sales.

    William C., Subscriber
  • Thank you for your excellent work and kind approach to your customers.

    Odette C., Subscriber

  • I've followed your recommendations since reading your columns in the Globe & Mail, and finding they published Stock Trends arrows in their financial listings. I do find them a guide to the general market and what I should be avoiding for declining chart trends.
    Has probably saved me the subscription by not rushing into hot stocks!

    Anthony D., Subscriber
  • I've followed a number of Stock Trends picks, and the methodology is solid.

    Doug B., Subscriber

  • I use Stock Trends to help direct my stock picks. Also, following the advice of Stock Trends I have religiously used stop-loss orders and have avoided hanging on to losing stocks for emotional reasons.

    John B., Subscriber
  • Stock Trends Weekly Reporter is an easy way to pick up equities that represent an upward trend.

    Subscriber
  • Hence, anyone who had followed the "Stock Trends" line should have sold their Bre-X shares and, with the windfall, paid for a lifetime subscription to The Globe and Mail and more. Talk about return on investment!

    Muni P., Subscriber

  • Just thought I'd call to thank you, Skot. Stock Trends Weekly Reporter helped pay for my daughter's education!

    Peter H., Subscriber

  • Your report is an impressive, excellent tool and I have recommmended it to friends.

    Colin E., Subscriber

  • I very much like the systematic approach to analyzing stock data, it fits my approach.

    Subscriber
  • I am just writing to tell you of my appreciation of your service! It makes so much sense to me. You seem to be an oasis of stability and sensibility in a stockmarket jungle.

    Adrian S., Subscriber

  • There is a lot to be gained from comparing trends of how individual stocks are doing within a sector, as well as how the sector is performing relative to the broad market.

    Dudley R., Subscriber

  • I want to thank you for posting such an excellent guide to technical analysis on the web. You have provided a great service to all of us novice investors.

    Michael C., Stock Trends user
  • Stock Trends information is part of the base information I review before making a trade.

    Subscriber
  • You have created and maintained an amazing, highly educational program and I am grateful for your part in getting our retirement funds to the good place they are.

    Karin M., Subscriber

Subscription Plans

Subscription Plans

STWR - Monthly

$19.95

Monthly subscription plan to Stock Trends Weekly Reporter - pay your monthly subscription fees by having them automatically charged (PayPal only). Free 7-day trial period. Subscribers may cancel before the end of any subscription month.

STWR - 1 Year Prepaid Subscription

$199.00

1 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 16% off monthly rate!

STWR - 2 Year Prepaid Subscription

$299.00

2 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 37% off monthly rate!

STWR - 3 Year Prepaid Subscription

$399.00

3 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 44% off monthly rate!

Stock Trends Editorial

  • Long and strong - Bullish trends in specialized retailers
    Long and strong - Bullish trends in specialized retailers Amidst a market still digesting the Federal Reserve’s first rate cut in nine months, one theme stands out in the latest Stock Trends dataset: the remarkable resilience of retail leaders. While thousands of common stocks across NYSE, Nasdaq, and TSX are posting Strong Bullish signals, three consumer-facing companies — TJX Companies, O’Reilly Automotive, and Dollarama — hold the longest uninterrupted Bullish runs on their exchanges.…
    Read more...
  • From Banks to Bytes to Uranium: Strong Bulls Align with ST-IM Signals
    From Banks to Bytes to Uranium: Strong Bulls Align with ST-IM Signals On September 17, 2025, the U.S. Federal Reserve delivered its first interest rate cut in nine months, lowering the federal funds rate by 25 basis points to a new target range of 4.00%–4.25%. This was a response to clear signs of a cooling labor market—slower job growth, shorter workweeks, and rising unemployment in several cohorts. Although inflation remains above the Fed’s 2% target, policymakers signaled…
    Read more...
  • Money management and trading psychology: building a resilient trading plan that integrates with the Stock Trends decision-tree framework
    Money management and trading psychology: building a resilient trading plan that integrates with the Stock Trends decision-tree framework Financial markets are unpredictable. Even when a trading strategy has a positive expectancy, a few bad trades can wipe out an account if position sizes are too large or emotions override discipline. Academic studies show that how much capital is allocated per trade is more influential on long‑term returns than the specific trading system used. For example, research cited by position‑sizing specialist Van Tharp found that…
    Read more...
  • Stock Trends: The Human Side of Market Trends
    Stock Trends: The Human Side of Market Trends Markets don’t move on math alone—they move on people. The screens light up because millions of humans react to news, stories, and each other. Behavioral economics is the field that studies those reactions. This article introduces the big ideas, then brings the story up to date with automated bots and AI trading—and explains how the Stock Trends framework helps you navigate it all.
    Read more...
View all Stock Trends Editorials
 
 

Subscription Plans

STWR - Monthly

$19.95/Month

Monthly subscription plan to Stock Trends Weekly Reporter - pay your monthly subscription fees by having them automatically charged (PayPal only). Free 7-day trial period. Subscribers may cancel before the end of any subscription month.

STWR - 1 Year Prepaid Subscription

$199/Year

1 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 16% off monthly rate!

STWR - 2 Year Prepaid Subscription

$299/2 Years

2 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 37% off monthly rate!

STWR - 3 Year Prepaid Subscription

$399/3 Years

3 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 44% off monthly rate!