With the U.S. economy still exhibiting signs of anemic growth (or worse), it's best to consider including a few defensive stocks in your portfolio, and with the aforementioned in mind, General Mills is worth an evaluation.
General Mills, Inc. (NYSE: GIS) is the second largest U.S. producer of ready-to-eat breakfast cereals, including several iconic brands, and is a leading producer of other packaged consumer foods.
Most analysts see GIS's FY 2008 revenue advancing 6-8%, followed by a 7-10% rise in FY 2009.
Analysts also like the fact General Mills has braced itself for the higher-cost commodity era as a result of efficiency improvements, productivity gains, and a more-favorable product mix. The Reuters FY 2008/FY 2009 EPS consensus estimates for GIS are $3.48 to $3.78.
After hitting a one-year low of $51.00 in January, the stock hit a one-year high of $62.50 last month. GIS opened this morning at $61.48. So far today the stock has hit a low of $61.33 and a high of $62.00. As of 12:54, GIS is trading at $61.58, up 0.68 (1.12%). The chart for GIS looks bullish but deteriorating slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just 6 weeks as long as GIS is above $55 at July expiration. Evergreen would have to fall by more than 10% before we would start to lose money. Learn more about this type of trade here.
GIS hasn't been below $55 by more than a few cents since February and has shown support around $60 recently. This trade could be risky if an economic recovery causes investors to rotate out of defensive stocks, but even if that happens, this position could be protected by the support the stock might find at its 200-day moving average, which is currently around $57.50. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in GIS.
Sonoco Products Company (NYSE: SON) provides industrial and consumer packaging products, and packaging services. The industrial division makes paper cores, cones and tubes used by customers in the textile, paper, film, and construction industries. The consumer unit manufactures a variety of paper and plastic containers for food, chemicals, and personal care items. The packaging services unit provides supply chain management, artwork and displays. The firm conducts more than 300 operations in 35 countries. Customers include General Mills (NYSE: GIS), Wal-Mart Stores (NYSE: WMT) and William Wrigley Jr. Co. (NYSE: WWY).
Sonoco pleased investors last week, when it reported Q1 EPS of 54 cents and revenues of $1.04 billion. Analysts had been expecting 51 cents and $995.4 million. Management also guided Q2 EPS to 58-61 cents (60 cent consensus) and FY08 EPS to $2.44-$2.47 ($2.42 consensus).
McDonald (NYSE: MCD) has issued a press release recently concerning the use of cellphone coupon marketing. The fast-food juggernaut wants its consumers to have the ability to snag a coupon whenever they desire and by hooking up with a company called Cellfire, McDonald's is hoping it can establish a relationship with some of the hip texters out there.
Cellphone users who download the Cellfire app can then text a certain number and receive a special code good for a specific offer. According to the release, McDonald's fans can take advantage of a free iced coffee promotion through April 27 in certain locations in Utah, Wyoming, and Nevada.
McDonald's knows we're an on-the-go society, and it obviously wants to leverage the fact that mobile devices are no longer just for talking -- we text, we play games, we surf the net, and, as I recently observed, we can even shop on Amazon on our cells (I say "we," but I should point out that I do not own a cell phone, believe it or not). However, as I stated in my previous post, I'm not so certain that Amazon's text-shopping service will take off.
As grain prices continue to rise, fueled in part by increasing demand worldwide, as well as farmers turning over their fields to grow corn for ethanol, earnings out from General Mills, Inc. (NYSE: GIS), while good, were weighed down by those soaring grain prices.
According to an AP report: "The cost of grain has affected a number of companies, especially those that make cereals. Grain prices have skyrocketed largely due to demand for corn used to make the alternative fuel ethanol."
So now my Cheerios and Wheaties cost substantially more, partly in order to produce ethanol, which is a suspect alternative fuel that's being used to fight a suspect phenomenon, global warming. Legislators, together with environmentalists, have created global inflation, to fight a problem that some scientists don't think exists. Does that make sense?
Grain costs not withstanding, General Mills had a very strong quarter. Sales were up across the board and international sales grew by more than 20%. Could it be that the weak dollar, is starting to help the bottom line of U.S. multinationals?
Look for other consumer staples companies to potentially post strong earnings in upcoming quarters as they profit from the sagging greenback.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/19/08.
Kraft Foods, Inc. (NYSE: KFT) is in a bit of a pickle. As the following article makes clear, the company knows it has to raise prices. There's just no choice in the matter. Commodity input costs are on the rise, and something has to give. But the problem is, consumers not only have to pay more for Kraft foodstuffs, they have to ante up more of the green stuff for everything else too -- fuel for the car, heating oil for the home, you know the drill.
If you're a Kraft shareholder, should this concern you? What about if you own other consumer-oriented stocks based on the supermarket shelves that are feeling the inflationary pinch, companies such as General Mills, Inc. (NYSE: GIS) -- which reported earnings today -- or Kellogg Company (NYSE: K), or maybe even beverage businesses like The Coca-Cola Company (NYSE: KO) or PepsiCo, Inc. (NYSE: PEP)? Well, it should, of course. Inflation is no fun, and with the price of oil hitting new highs recently, a trend that seems very much intact, consumers will be strapped. In fact, Kraft is now trying to make up for lower volumes by raising the cost of its goods; this isn't ideal, perhaps, but Rick Searer, who is the president of Kraft North America, brings up an almost humorous point -- "consumers have to eat." I have yet to meet one that doesn't, come to think of it!
But I think the consumer companies are relatively sophisticated with their data-analysis protocols and are, perhaps, a bit more nimble in terms of deducing what shoppers want to buy for purposes of stocking their pantries. At least, I would hope they are -- we've been hearing about better data-mining techniques for years. Kraft obviously will promote a wait-and-see attitude in terms of the consumer and her reaction to the recession, but I don't think shareholders should be overly worried at this point. A lot of these defensive names have international exposure and stand to benefit from the falling dollar, for one thing. For another, we all have to eat! And since the defensive names generally have dividend yields, they tend to be safer bets during a recession; don't think they can't fall, though, because they can. One just hopes they don't fall as much as, say, your typical financial entity or a broad market index.
Disclosure: I own shares of Coca-Cola; positions can change at any time.
The company said its quarterly profit climbed to $430.1 million, or $1.23 per share due to higher demand for its products. Excluding one-time items, the company's earnings figures came in at 87 cents a share, exceeding analysts' forecast for a profit of 79 cents a share.
General Mills posted 12% growth for its third-quarter revenue, which surged to $3.41 billion from $3.05 billion a year ago. This was above analysts' predictions for revenue of $3.24 billion in the quarter, according to Thomson Financial.
When the Federal Reserve meets and changes rates, we all have questions: What does it mean to me? Will my mortgage rate go up or down? Is this a good time to refinance? Bankrate is here to help. We've looked at five categories -- mortgages, home equity loans, auto loans, credit cards and certificates of deposit -- to determine if the Fed's moves made you a winner or a loser.
Forget all the talk you'll hear about how Social Security is okay until 2040 or thereabouts. That is, as we'll soon see, utter nonsense. The real problem starts only a decade or so from now, when Social Security begins to take in less cash than it spends.
Investors on Wall Street have been worried about a recession for months. Ditto for the folks on Main Street -- especially if they've been trying to sell a house, or just keep up with the payments. It looks bad. But the Fed is using new weapons that may soften the blow.
Del Monte Foods Company (NYSE: DLM) is one of the largest producers and distributors of branded food and pet products for the U.S. retail market. Its Consumer Products segment produces fruits, vegetables, tuna, broths and tomato-based foods under such well-known brand names as Del Monte, StarKist, S&W, Contadina and College Inn. Its Pet Products segment offers the Meow Mix, Kibbles 'n Bits, 9Lives, Milk-Bone, Meaty Bone, Snausages and Pounce brands. The company also produces and distributes private label food and pet products. ConAgra Foods (NYSE: CAG) and General Mills (NYSE: GIS) are major competitors.
Del Monte pleased investors last week, when it reported fiscal Q3 EPS of 28 cents and revenues of $1 billion. Analysts had been expecting 24 cents and $960 million. The CEO attributed success to pricing actions and cost reductions. Management also guided Q4 EPS to 27-31 cents (25 cent consensus) and Q4 revenues to about $0.997-$1.02 billion ($992.8M consensus).
Everyone loves ketchup (well, then again, I'm sure there are a few out there who don't). But should everyone love Heinz's (NYSE: HNZ) latest earnings missive?
I say the earnings were respectable, if not utterly spectacular, in the third quarter. The top line moved up a robust 14% to $2.6 billion in sales; operating income increased 8%. The bottom line, however, was, eh, okay -- $0.68 per diluted share for this Q3 versus $0.66 per diluted share for last year's Q3. A two-penny increase isn't a reason to party, I suppose. Then again, Heinz isn't one of those companies that inspire you to throw a party upon an earnings release. Like Hershey (NYSE: HSY), Campbell Soup (NYSE: CPB), General Mills (NYSE: GIS), Kellogg (NYSE: K), and Kraft (NYSE: KFT), it's a consumer foodstuffs name backed by a portfolio of well-known brands that people gravitate toward every day in supermarkets across the globe.
Here's the thing about Heinz, however: it sports a yield of approximately 3.3%, and it is in the middle of a tight 52-week range. That is definitely an attractive situation for the stock. Heinz is being perceived as a safe, recession-proof play. I'm not sure anything is truly recession-proof, but I do think the yield is impressive, and I think that such a stock may continue to hold steady, and even outperform, in this environment.
Recession Stocks These companies are doing well despite the (possible) recession and are poised to cope with further weakness. Recession Stocks - Forbes.com
I love ice cream as much as the next guy. OK, way more than the next guy. I've eaten far more than my fair share of Haagen-Dazs and Ben & Jerry's lux frozen treats. But though I've watched with fascination as Ben & Jerry's exalted hippie icons and the odd politician with its flavors, I've never thought of an ice cream as an icon of political opinion.
No more will I hold such a narrow world view! This weekend, Haagen-Dazs announced a new flavor, Vanilla Honey Bee. The flavor isn't meant for its delicious honey taste, as it is to bring more visibility to the plight of the honey bees (overworked, it seems, from too much travel and forced labor in the almond groves, though cell phone towers have also been suspected). Haagen-Dazs is donating $250,000 to two universities to study Colony Collapse Disorder, and a spokesperson says that 40% of the company's flavors depend (in one way or another) on bees: "We use 100% all natural ingredients like strawberries, raspberries and almonds which we get from California. The bee problem could badly hurt supply from the Pacific Northwest."
On the other side of the ice cream aisle, Ben (Cohen) and Jerry (Greenfield), founders and corporate namesakes of Ben & Jerry's, have gone public with their endorsement of Barack Obama for president. They will tour Vermont in Obamamobiles, giving away scoops of "Cherries for Change" ice cream. While fans on Obama's web site seem excited, there's no news as to what sort of flavor "Cherries for Change" is (or is it just Cherry Garcia with a new label?), whether "Baracky Road" or "Yes we Pecan" will follow, or if corporate overlord Unilever (NYSE: UL) is distributing the flavor to grocery store freezer sections near you.
Minneapolis-based food maker General Mills Inc. (NYSE: GIS) announced today that it is raising its fiscal 2008 earnings guidance on higher-than-expected sales growth and cost cutting. For fiscal 2008, ending in May, General Mills expects earnings per share of $3.45 to $3.47. The previous range had been $3.39 to $3.43 per share, and analysts surveyed by Thomson Financial had expected $3.45 per share.
Despite raising grain prices, General Mills has seen strong results from such products as Oat Cluster Crunch cereal, Progresso soups, and Fiber One bars.
This morning, better-than-expected earnings results at 
I love ice cream as much as the next guy. OK, way more than the next guy. I've eaten far more than my fair share of Haagen-Dazs and Ben & Jerry's lux frozen treats. But though I've watched with fascination as 
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