"Despite finicky consumers, General Mills (NYSE: GIS) has seen its business hold up extremely well," says Chuck Carlson.
In The DRIP Investor, he adds, "Its stable of strong brand names, focus on costs, and overseas growth opportunities should drive profits higher in the near and long term. I like the stock for all seasons."
"General Mills owns some of the strongest brands on your grocer’s shelves, including Green Giant vegetables, Old El Paso Mexican food, Häagen-Dazs ice cream, Yoplait yogurt, and Cheerios and Wheaties cereals.
"Some consumer-products companies have been hurt by consumers 'trading down' to cheaper brands. However, General Mills has managed to maintain its appeal. U.S. retail sales rose 6% in the most recent quarter, with sales gains being recorded across nearly all brand segments.
"The performance fueled better-than-expected profi ts in the quarter. Per-share profi ts in the August period were $1.28 per share, up 33% and a whopping $0.25 better than the consensus earnings estimate. General Mills expects the strong operating momentum to continue.
"In addition to solid price appreciation potential, General Mills offers good dividend returns. The current yield is nearly 3%. The dividend was raised 9% earlier this year. Given projected earnings growth, I would expect General Mills to continue to boost its dividend.
"You couldn’t tell that 2008 was a horrible year for stocks by looking at a chart of General Mills. The stock is down only slightly from its all-time high of $72 posted in 2008.
"The stock is not necessarily cheap at 15 times the consensus earnings estimate of $4.50 for fi scal 2010 ending in May, but nor is it especially pricey.
"I like General Mills for all seasons. I think the stock will continue to put up decent gains should the market rally continue. And I would expect the 'defensive' qualities of the stock to fuel above-average price resiliency should the overall market turn down.
""The stock has rebounded strongly since March in line with the overall market, and further strength is likely. The yield of nearly 3% is an added benefit.
"Investors should use any price breaks to buy these quality shares. DRIP investors please note that General Mills offers a direct-purchase plan whereby any investor may buy shares directly, the first share and every share."
