Unlike most of the S&P 500, General Mills' stock peaked in the fall of 2008 and failed to catch this year's rally, so its shares are still trading close to their 52-week low. The company, which makes food products like Cheerios and Yoplait, has higher earnings projections, profit margins, and return on equity than its competitors. "General Mills' categories are not only faster growing, but also reward brand equity and innovation," observed RBC Capital Markets analyst Edward Aaron, who rates the company an "outperform," in a recent report. "As a result, Mills' portfolio is more insulated from private label."
While the company took a publicity hit when the FDA busted its claims of Cheerios' health benefits, its amped-up advertising efforts have been largely successful. Last quarter, General Mills boosted its marketing spending and increased revenues by 4%. Several of its divisions, including Pillsbury and Big G Cereal, posted double-digit sales increases in the U.S., cushioning the impact of foreign exchange on overseas sales.
--M.K.
