A Big Upgrade for General Mills

More top-performing CAPS members are turning bullish on General Mills (NYSE: GIS) these days -- enough, in fact, to upgrade it from the three- and four-star ranks it has held for the past year all the way to five stars. A total of 797 members have given their opinion on the company, with many of them offering analysis and commentary explaining the recent optimism.

During a recession, many consumers turn to value-oriented restaurants like McDonald’s (NYSE: MCD) and shop at bulk discount chains such as Wal-Mart (NYSE: WMT). But even as consumer budgets tighten, store-shelf food suppliers like General Mills have been able to increase prices over the past several months. Retailers have accepted these increases, and consumers have been willing to absorb them for name-brand products from General Mills and Kellogg (NYSE: K). Additionally, consumers who used to visit restaurants more frequently are instead turning to higher-end prepared foods from General Mills, Kraft (NYSE: KFT), and ConAgra (NYSE: CAG).

General Mills still sees strong sales on both ends of the price spectrum, including lower-priced brands like Hamburger Helper and higher-end Macaroni Grill pasta mixes. General Mills is also doing well competitively; Campbell Soup (NYSE: CPB) has faced difficulty as General Mills' Progresso brand picks up market share in the soup segment. Noting that people still have to eat even in a recession, many CAPS members expect that demand will remain for General Mills products and believe dividend-paying stocks like General Mills are good for any portfolio. As such, 94% of the 797 CAPS members rating General Mills expect it to outperform the market.

Copyright © 2008 Universal Press Syndicate.