Profits up in the heartland; at least for General Mills (NYSE: GIS) as they doubled in the fourth quarter beating analysts estimates by promoting their strong brands to consumers as management understood well the economic headwinds they were facing.This contributed to GIS income for the year making it into positive territory as it reported this morning that net income edged up to $1.3 billion, or $3.80 per share, from $1.29 billion, or $3.71 per share, in the prior year. Annual sales climbed 8 percent to $14.69 billion from $13.65 billion.
Chairman and CEO Ken Powell said in a statement that the recession has prompted shoppers to purchase many of its food brands. Increased marketing efforts, which were implemented by the food maker to highlight its brands for shoppers who may be tempted to switch to cheaper store brands, appeared to pay off. "In today's very challenging economic environment, our leading food brands offer the quality, convenience and value that consumers are looking for and, as a result, our businesses are showing strong growth," he explained.
This certainly reinforces a post from Monday June 29, where I recommended GIS as part of a group that was high yielding, safe and together with the other four made for great diversification as well. At the time of the report GIS was $55.28. This morning it is not a surprise that it is trading up, currently at $57.66.
As a company with a 3.11% yield and a puny beta of 0.27, this stock remains a good pick in a questionable market, especially when one is looking for a safe place to get a little income. It may not compete with the high flyers if the market takes off, but it will keep pace with the overall market, and has good prospects to appreciate year after year.
Update: GIS finished the day at $58.18, up $2.16.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares in GIS.
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