Paperstand (SFD, DE, TEVA)

The WSJ’s “Ahead of the Tape” column discusses Smithfield Foods (SFD), a very acquisitive co. Smithfield has been on a binge of late. In the past yr or so, it acquired Sara Lee's European meat business and rival Premium Standard Farms. It also bought ConAgra Foods' Butterball brands turkey division through a joint venture. Smithfield is now the nation's largest player in turkeys, and it is stuffed with debt. Its interest costs have doubled in the past 4ys. Moody's has lowered its credit rating. CEO Larry Pope has said he wants to bring debt down. But this is a tough time to do it, b/c hog prices are falling. Analysts recently have been taking down their earnings ests. Smithfield reports next week. Its share price is already down 19% since a July high. Smithfield will likely be fine in the long run, but all the debt it's taken on doesn't help its flexibility in a tough economic environment.

“Ahead of the Tape” also discusses Deere (DE), whose investors have enjoyed nature's bounties. The co's shares are up 53% YTD. A surge in corn acreage amid strong ethanol demand caused Deere's tractors and combines to roll off the factory floor. But the stock has slipped 10% from its 52w high reached Nov. 6 on concerns that next year's corn crop won't stack up with this year's. High corn prices, combined with a steep drop in the price of ethanol, have forced a number of ethanol makers to close shop. Even established ethanol players are suffering. ADM (ADM), the nation's largest ethanol producer, said income from corn processing for biofuel plunged 48% from a year ago in its latest earnings report. The upshot: Ethanol-driven demand for corn next year may weaken. Deere reports quarterly earnings today. Look out for warnings about the outlook for farm-equipment sales next year.

Barron’s Online discusses Teva Pharma (TEVA), whose shares are up 43% YTD. "There are a lot of positive things happening over the next year or two," says Alan Lancz, of Alan B. Lancz & Associates. "If you have a long-term time frame, you can make good money here and not overpay for it." Earnings could climb next year twice as fast as those generated by the broader stock mkt, thanks to a strong pipeline, growing demand for generics here and abroad and rising branded-drug sales. Teva has lots of cash to fund acquisitions. In a shaky economy, and there's little doubt that we are in the midst of one, drug makers are attractive defensive plays. "They are accelerating earnings growth at a time when the rest of the mkt faces lots of challenges," says Peter Schofield, of Knott Capital Mgmt.