Three Companies For Your Morning Breakfast Portfolio

Kaitlyn is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

While many investors pursue the latest tech fad or the latest IPO, the supplier of your morning cereal, fruit bars, and morning sausage patties is also a great investment. With breakfast items a vital part of a morning routine, these companies are not only a great investment for your diet, but also for your wallet. 

Your Lucky Charms 

With net sales increasing 7% to $17.8 billion, General Mills (NYSE: GIS) has more than your average Wheaties in its portfolio. With the recently acquired Yoplait line, as well as staple brands such as Cheerios, Progresso Soup, and Pillsbury, General Mills has a diversified portfolio for long-term growth. With net sales of $366.3 million for the quarter, up 55 cents per share, innovation and new product launches have driven bottom-line revenue upwards of $1.86 billion for the year.(NYSE: GIS)

Despite disappointing Wall Street estimates this week, with an adjusted earnings forecast for fiscal 2014, General Mills still is a great deal. Part of those estimates were due to rising commodity prices for grain and other staples for cereal making, which decreases margins and strains bottom-line growth. 

However, new acquisitions and product innovation have contributed to the success of General Mills, along with higher sales volume and increased demand internationally. While core brands have remained strong, revenue has increased due to increasing investments in Yoplait Canada and Brazilian food company Yoki Alimentos. Recently, General Mills announced the overhaul of Yoplait Greek yogurt, which will use the traditional straining process instead of a thickener, which adds value to the product line and growing sales in this trendy food. 

The grrrrrrrrreat return on your investment  

Kellogg (NYSE: K) has seen its share price rise 18% for the last year.   With broad brand diversification with names familiar to the household consumer such as Pop-Tarts,Corn Flakes, Rice Krispies, Cheez-It, and Morningstar Farms, it has expanded brand holdings for long-term bottom-line growth. 

With expansion of product holdings, Kellogg's has pushed for bottom-line growth as well as top-line revenue from new products. Net sales grew 12.2% to $3.9 billion, and operating profit came in at $503 million in the last quarter due to product innovation. Kellogg continues to seek new ways to cut down on rising commodity costs and additionally increase operating margins. 

Post (NYSE: POST) also has grown the bottom line with new acquisitions and product expansion. Post is the third-largest seller of ready-to-eat cereals in the United States with a 10.4% share of retail sales. Growth has come through a variety of outlets, most recently the purchase of Hearthside Food Solutions. Hearthside will add $70 million to full-year sales and as much as $19 million to earnings for Post. The company also bought Attune Foods last year to increase products in the organic food category. Expansions into the granola and organic category is a good strategic move for Post, as breakfast foods continue to increase in nutritional value and organic offerings. 

Post also recently decided to close its Modesto plant in California. According to Nielsen, a market research group, category growth declined 2.4% for the quarter. The closure of the Modesto plant will save $14 million dollars annually, and will free up revenue for future growth. Additionally, the acquisition of Hearthside includes a 135,000 square foot manufacturing facility, and a 30,000 square foot finished goods warehouse, both of which will be used for the production of Post cereal.   

The bottom line 

With better-than-average returns, and new innovation within the breakfast category, these three companies have produced rock-solid returns through recessions and depressions. With changing breakfast items and top-line revenue increasing with new innovation, all three of these companies are producing rock-solid returns by efficiently expanding into new categories and watching expenses as raw material prices increase. 

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Kaitlyn Tokay has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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