I'm Reiterating my Buy rating for General Mills (NYSE: GIS), first recommended on April 8, 2009 at a price of $50.81. General Mills has not advanced as much as I expected since April, but the 'frugal consumer' / Americans eating more meals at home trend will continue, and how! Hence, if you haven't purchased shares of GIS already, now's the time.
Solid brands, good cash flow, and room for margin expansion on new manufacturing efficiencies adds to the positive story. But again, a P/E of 15 argues now is the last time to position yourself for out-sized gains. The First Call FY2009/FY2010 EPS estimates for GIS are $4.26 to $4.61.
Stock Analysis: General Mills is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in GIS now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your GIS position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $22.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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