Battle For Breakfast: 4 Great Stocks to Invest In
TS is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Countless savy investors have made enormous amounts of money by investing in products they know and use everyday. Warren Buffett told a group of students at UGA to "invest in what you know." The example he gave was himself on chewing gum and Wrigley's. Keeping that in mind I research companies that produce products I normally buy. When it comes to breakfast cereals, I usually buy both, Genral Mills Inc (NYSE: GIS) and Kellogg CO (NYSE: K), but at the same time what about companies like Krispy Kreme Doughnuts (NYSE: KKD), and Dunkin' Brands Group (NASDAQ: DNKN)?
So which breakfast cereal is the best for your portfolio? Jim Cramer likes General Mills over Kellogg as stated in a tweet sometime back @jimcramer. GIS has a five year earnings growth rate of 13.27% as compared to K with only 6.16%. Kellogg Co also pays a higher annual dividend of $1.72 per share vs. General Mills of only $1.22. They are around $10 apart in current price per share with General Mills Inc at a price of $39.02, which is 6.33% below the 52 week high of $41.06. On the other hand Kellogg Co is near a 52 week low of $47.88 at a price per share of $49.50. Both have a twenty year track record and the twenty year chart for General Mills looks like a stairway to heaven. Kellogg's twenty year chart shows some promise too, but the volatility appears greater over the last twenty years.
Both companies would be a good investment. I personally prefer companies near the 52 week low which would recommend Kellogg Co. The problem I have with Kellogg though, is when looking at the last five years on their chart it almost looks like their ceiling for growth is around $56 per share and they just cannot seem to break out, while General Mills just keeps steadily climbing higher at this point given the ups and downs in the market. If Kellogg can break through the invisible ceiling it would offer more room for investor's money to grow, if not it would be a good company to invest in mainly for dividends. General Mills right now appears to offer both a good dividend and potential for further growth.
Kellogg Co has a vast global infrastructure which will insure growth in over 180 countries and manufacturing in 18. Kellogg is intense with numerous Quality Tests from the beginning process and even after the product gets to the store, and they have over 100 ready to eat cereals upon demand.
General Mills is more diverse with several brand names and products not just cereals, such as Green Giant Frozen Vegetables, and Pillsbury. They manufacture in over 30 countries and distribute to over 100 countries. They are relentless in their R&D and acquisitions.
On the not so nutritious side of breakfast is the doughnut. Who does not love a good hot fresh baked doughnut? I know I do! Here we have Krispy Kreme, and Dunkin' Donuts for those on their morning rush to work. Krispy Kreme Doughnuts seem to be popping up everywhere in my area, the local supermarket to convenience store. They have 20 different varieties of pastries and a broad array of coffee products. KKS was raised from equalweight to overweight by Stephens on July 16th, 2012 and is at a current price of $6.56 per share. Krispy Kreme Doughnuts has 234 stores in 38 states and a total of 460 stores in 20 countries. They have a total revenue of $407.1 million and a profit margin of 40.07%.
Dunkin' Brands Group and Baskin-Robbins: what a sweet combination of donuts, coffee, and ice cream! What a great stock for the sweet tooth in all of us. Even though, DNKN has been downgraded from overweight to neutral by JPMorgan, the company is still a good investment for the long term. The company is 90% over it's IPO from July 2011. They pay a $.60 yearly dividend and are at a current price per share of $34.47. They opened their 10,000th store location in mid December of 2011.
If Warren Buffet is right on investing in what we know and like, all of these stocks or any of the above would be a good addition to a portfolio over the long term. They have all had growth during the recession and are still posting profits.
TSDavis75 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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.If you have questions about this post or the Fool’s blog network, click here for information.
