General Mills: Hearty quarter, healthy stock

General Mills (NYSE: GIS), a company that is always in a fight with Kellogg (NYSE: K), reported earnings for the fiscal first quarter on Wednesday. The stock held up very well amid all the chaotic selling that gripped Wall Street on that awful day. And why not? You know the drill. This is a defensive name, people still have to eat cereal while the bears are knocking at the door, etc.

The quarter was pretty good. Sales increased 14% to $3.5 billion. Adjusted earnings per share increased 19% to $0.96 (this excludes the effect of a mark-to-market valuation involving commodities). As if all that wasn't enough, there was a huge increase in net cash from operations. Last year at this time, General Mills generated about $21 million in operational cash flow. This year's quarter saw that metric jump over ten times to nearly $226 million. There was one problem, however. Capital expenditures and dividend obligations were higher than that number. I generally like to see operational cash easily take care of both those requirements.

Alas, it was not to be this quarter. That's okay. I think General Mills is a healthy company, and I believe it will continue to be able to pass along price increases to help fortify its bottom line. Guidance for fiscal 2009 was increased to $3.81 to $3.85 per share. The old outlook called for $3.78 to $3.83. And as for the cereal-maker's stock, it has been very, very strong. General Mills' stock was up more than 20% year-to-date. Over the last month, it's been up 3%. Heck, I'd take that, all things considered. It's not far from a 52-week high.

Personally, I think General Mills is a great way to tackle the bears that are patrolling the market, but I'd wait for a pullback. I'd rather look at the company when its dividend yield is a little higher than where it currently stands. If I bought now for a trade, I would definitely use a stop to protect the position. As I've said before, there aren't many safe bets in this environment.

Disclosure: I don't own any company mentioned; positions can change at any time.