There has been a lot of talk lately about food stocks. Spam-maker Hormel (NYSE:HRL) and egg producer Cal-Maine (CALM) are two downturn picks we’ve published in recent days. Even in a recession, the logic goes, people still have to eat.

Today, The Sovereign Society’s Investment Director, Eric Roseman, says France’s Groupe Danone (EPA:BN) is another excellent way to play the downturn.

The world’s largest fresh dairy company posted strong earnings last week. And it is set to benefit from a correction in commodity prices.

Food stocks are popular recommendations during economic downturns.

Another great global giant is Groupe Danone (EPA:BN) of France.

Danone’s stock plunged almost 20% in June as panic-selling engulfed global markets. Danone’s earnings, announced last Friday, were way above consensus estimates and the stock is up more than 10% in July. Danone is the world’s largest fresh dairy company with a significant market share in spring water (Evian) and a host of other products.

Despite surging input costs for the food companies this year, the majority of these giants are successfully raising prices. Consumers are still loyal to their favorite brands – even in a slowdown or recession. They won’t change their coffee brand or morning yogurt for a lower cost alternative. I expect that trend to hold true over the next several months until stocks finally muster a bottom.

Finally, commodity inflation now appears to be waning. Oil and natural gas prices are down sharply this month leading to the first severe commodity correction since last August. Other commodities, including the agricultural commodities, are down sharply, too.

Lower commodity prices for the remainder of 2008 would boost corporate earnings. It will also help the food and beverages group enormously.

Source: Even During a Recession, Everyone Still Has to Eat