General Mills, Inc. (GIS)

General Mills is one of the largest producers of packaged consumer foods and derives 70% of its revenue from U.S. retail division, while International division and Bakeries and food services generate 15% each. The company’s product portfolio includes major brand names like Pillsbury, Cheerios, Green Giant, Yoplait, Old El Paso, Betty Crocker, Chex, Häagen-Dazs, and Wheaties.

Consumer foods market is highly competitive with Kellogg leading the market share followed by General Mills. The market is influenced by efficient cost management and product innovation. General Mills’s joint venture with companies like Nestle, Haagen-Dazs, Co-op de Pau, and 8th Continent should help the company to be in a better position to optimize its cost through supply chain efficiencies.

The company’s top-line saw a growth of 5.3% for Q2’07 backed by increased unit volume and better price realization. General Mills wants to further amplify its sales by capitalizing on opportunities in new channels and international markets. Gross margins improved despite higher input costs, reflecting favorable product mix and efficient productivity.

General Mills plans to introduce 80 new products for the remaining of the fiscal, which should boost company’s revenue growth. To support this revenue growth the company is increasing its investment in marketing activities. Additionally, the company’s focus on higher margin businesses coupled with productivity initiatives to eliminate non-value added product attributes and optimum global sourcing should supplement its gross margin expansion plan.

Combination of top-line growth through launch of new products, and margin expansion supported by productivity should drive a sustainable shareholder return.

General Mills increased prices and reduced package sizes as the price of grains, especially corn, were dramatically increasing in price. Even though the price of corn has dropped from $7 to $4 a bushel, they will be slow to reduce these prices. Other things in their favor - lower transportation costs to transport their finished product, lower energy costs to operate their factories, and a failing economy where people will be eating cereal at home for breakfast instead of going out. They may be charging $4-$5 for a box of cereal in the grocery store, but it still comes out to $.25 for a bowlful versus paying $8 - $10 for breakfast with coffee at Cracker Barrel or Denny's. The negatives are that store brands are even cheaper and as the economy enters a deep recession, folks will be switching from name brands to save a few more bucks. Also, I don't know what goes on behind the scene of any company any more. Is there cash invested in hedges against the U.S. dollar like so many food and other companies in Brazil where the losses are mounting up to over $30 billion? Are they involved in stock buy backs to cheat the shareholders out their dividends just to make a poor performing CEO look good? Do they have a rogue financial guy who thinks he can make money on betting in the commodities and thought the price of corn was going to go up forever and has lost billions of dollars but it just hasn't been uncovered yet? I do not know the answer to any of these questions and am finding out that there may not be one company we can trust anymore to just do what they claim to be doing. But, if none of this negative stuff is going on, then General Mills looks like a decent place to put some money for the next year or so.

With reinvested dividends, slightly ahead of the S&P. "Safe" - grandma's stock. And I love grandma. People gotta eat, steadily rising dividends for 107 years, Betty Crocker, Old El Paso, Cheerios...who needs banks?

I recently ventured down the path of organic food in an effort to bring healthier foods into my daughter's life. I found some of the best stuff made by a company called Cascadian Farms, which is owned by General Mills. My daughter loves all of the stuff she has tried so far. The organic market is exploding into larger retailers across the country. I think General Mills will benefit from this.

Stable company in an unstable market.

Slowly but surely this stock will quietly dominate. Cereal might be one of the most inelastic and cost effective components of the modern economy.

Dannon settles Activia lawsuit for $35 Millions. The same group looks also to file a class-action lawsuit against General Mills for false advertisement about the benefits of some Yoplait Yogurt. Under the settlement each consumer with proof of purchase will be entitled up to $100.
ConsumerAffaires.com

excellent company with solid management. very good balance sheets

WIth a down economy, cereal is a practical food to eat - can be nutritious and has a long shelf life. Love Cheerios!!

New 52 week low. Good defensive stock. Good dividend. Foreign growth potential. Strong brands. Cramer favorite.

General Mills can provide the world with easy to prepare food and complete meals in a bright inviting box.
Their consumers age range from babies to the elderly. Their youngest customers keep growing up as the population esplodes. Familes don't have the time to cook like their grandmas or mothers. They have the right price, shelf space, deversity from yorget to cherios and over seas market. Most importantly employs are respected,and have a good working conditions. buy and hold

People are going to eat no matter what the market does.

When the going gets tough, the tough eat Wheaties!

Seriously - The management team here is hitting on all cylinders. Gaining profitable market share. Proactively passing on commodity increases to end consumers. Expanding internationally. Extending proven brands into innovative niches (see Fiber One). How long can they keep sustaining this performance level? - Time will tell.

Produce a variety of quality products & have had few "misses"

Buy @ $54

A stock that has actually gained recently, absolutely destroying the S&P.

The economy may tank, but everyone still needs food.

Another all time winner

Recent use of retro packaging for Honey Nut Cheerios, Trix, Cocoa Puffs and Lucky Charms is a stroke of marketing genius. I also like the fact that they own Progresso as well...lot of people eating soup in the next couple months. Soup is all that CPB has going for it so I like GIS a lot more.

Unfortunately, GIS has been given the Cramer kiss-of-death...but even that can't stop GIS over the long term. They've got top management...dealing with the recession by cutting cap-ex and weak brands...but holding/raising their dividend for loyal stockholders.

STRONG brand recognition (Betty Crocker, Pillsbury, etc.). People will trade down on SBUX (brew it at home!), they will trade down on MCD ($5+ greasy trash) but it will take much longer for people to trade down on GIS. C'mon...we all know bag cereal SUCKS! Initiate your positions at 3.5% DY or higher. LONG GIS!

FOOD