Regular readers know that the investment bias here is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable, global trend as a support. And with this in mind, General Mills (NYSE: GIS) is worth a review. In general, analysts see 2009 revenue increasing 7-10%, which, under these economic conditions, is enough to warrant throwing a party. Some negative headwinds created by a relatively stronger dollar should be offset by institutional investors stocking up on defensive shares. (Those same institutional investors are gradually adding cyclical and riskier shares, hence they have to balance it out somewhat, to GIS's benefit.)
Other positives: Americans -- and this is a long-term trend -- will be eating many more meals at home as they belt-tighten and eliminate discretionary expenses, and 'breakfast out' is one. It's nice to be a cereal company in that environment, particularly when you own such icon brands as Wheaties, Cheerios, and Lucky Charms. The First Call F2009/F2010 EPS estimates for GIS are $3.88 / $4.13.
Stock Analysis: General Mills is a moderate-risk stock. Consider buying a 25% position in GIS now; then buy another 25% in three months. Under any circumstance, don't buy more than 50% of your GIS position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $27.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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