Pros and Cons of Investing in General Mills

PHOTO CREDIT: General Mills

OVERVIEW

General Mills Incorporation is a company based in the United States. The company develops, manufactures, and distributes fresh, frozen, and packaged food products around the world. The company operates under the Cheerios, Hagen-Daz, Cinnamon Toast, and many other brands. The company was founded in 1866.

PROS:

  1. General Mills is a great reopening play in an investor’s portfolio. The company saw a drop in demand for some of their products as people stayed indoors and as commercial sales to restaurants and other large venues fell. However, once these locations reopen and as people go out again, the company will see stronger growth.
  2. General Mills also saw some positive benefits from the pandemic. As the first lockdowns went into place and as people worked from home, the company saw a rise in sales of packaged and frozen comfort foods. This initial rise in demand benefited the company as they were able to sell more products. This also benefited investors.
  3. The company offers a wide range of products to its consumers. From popular Cheerios to ice cream and other dairy products, the company has food for every consumer in most markets around the world. This wide range of brands has helped the company unlock new growth opportunities. This also benefited investors in the company.
  4. General Mills is a safe investment option in an investor’s portfolio. People will continue to purchase food regardless of the economic times, something that will help the company maintain sales and remain stable during tough economic times. This has benefited the company and its investors in the past.
  5. The company continues to see rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has helped the company acquire more food companies and grow its business. This has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 17.63 billion and profits of around 2.18 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they had revenues of around 16.87 billion and profits of around 1.75 billion.
PHOTO CREDIT: Yahoo Finance

CONS:

  1. The company faces tough competition in the food industry. Some of these competitors include Hershey’s, Kellogs, PepsiCo, and many others. This competition might hurt the company and its investors in the future.
  2. Inflation might cause the company to raise prices and squeeze the company’s profit margin. As commodity prices increase, the company will see costs to produce, package, and transport the food from factories around the world increase.

MY OPINION

I think that General Mills is a great long-term investment due to its position as a good reopening play, the positive impacts from the pandemic, its position as a safe investment option, a wide range of products, as well as rising revenues and profits. However, tough competition and negative impacts from inflation might hurt the company and its investors in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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