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As expected, food producer General Mills (NYSE: GIS) is benefiting from the U.S.'s 'frugal consumer' trend, hence I'm Reiterating my Buy rating for company, first recommended on April 8, 2009 at a price of $50.81. More U.S. consumers will continue to eat an increasing number of meals at home: for many American families, dinner out weekly is out; fresh meals prepared with natural foods at home are in.
Solid brands, good cash flow, and room for margin expansion on new manufacturing efficiencies add to the positive story. The First Call FY2009/FY2010 EPS estimates for GIS are $4.50 to $4.86.
Technically, General Mills' stock chart is beautiful - a strong uptrend, with minor, constructive pull-backs, and a price that continually stays above the 50-day moving average - a sign that institutional investors are adding to their GIS positions.
Finally, the Sell/Stop Loss has been raised to $47, or to just under cost, from $22.
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 25% position in GIS now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your GIS position before December 2009. Sell/Stop Loss if you bought shares in this company: $47.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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