Ralcorp Holdings: Stock the pantry

Around that storied kitchen table, consumers know that saving pennies adds
up to meaningful dollars. Just ask shoppers who stock their pantry with
goods from Ralcorp Holdings (NYSE:RAH), which has scurried to the top shelf
as consumer attitudes drop to the floor.

Frugal buyers get a full-brand breakfast from St. Louis-based Ralcorp, with
cereal (it owns Post as well as value brands), frozen pancakes, French
toast, syrup and jams. Snacks include Nutcracker and Flavor House nuts
and candy, and cookies and crackers come from its Bremner Foods Group unit,
which includes Ry Krisp.

That's not all. For investors, Ralcorp has served up a 28% gain from an
early July low at $48.08 to Friday's close at $65.77. It has a year-to-date gain
of 8%, compared with a loss of 3.7% in much larger competitors' Kellogg Co.
(NYSE:K) and loss of 12.2% at Kraft Foods (NYSE:KFT). Ralcorp's market
capitalization is $1.7 billion.

Ralcorp, known as a store-brand food manufacturer and supplier, has tied
together a string of annual revenue gains through acquisitions -- seven since
mid-2005 -- and internal growth. In August, it made its largest acquisition,
buying the Post brand from Kraft Foods. By adding such a recognizable name,
Ralcorp is tipping its business mix toward national brands and balancing its
value brands with name items.

Sales have grown to $2.2 billion in fiscal 2007 from $1.3 billion in 2003.
Post is expected to add another $1 billion in annual revenue and to be
accretive in 2009. Ralcorp sells to retail chains, mass . . .

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