Should You Invest in Kellogg?

PHOTO CREDIT: Kellogg

OVERVIEW

Kellogg Company is one of the largest companies in the United States. They offer several kinds of products in their portfolio, especially their cereal products. They operate under Kellogg’s, Pringles, RXBar, Cheez-It, and much more. The company was founded in 1906.

Why You Should?

  1. The COVID-19 Pandemic has accelerated the growth of its sales. Kellogg mainly sells pantry foods like cereal. Consumers have been stocking up on these foods during this pandemic and Kellogg has seen trends shift as they see higher cereal and snack sales.
  2. Kellogg has several strong brands in its portfolio. Consumers will prefer these brands over others because of consistency and other factors. Some of these brands include Kellogg’s Cereal, Pringles, and Cheez-Its. This loyal consumer base will benefit the company’s long term growth.
  3. Kellogg’s sell a wide variety of products. They mainly sell cereal products but they also sell Pringles, Cheez-Its, RXBars, Special K, Rice Krispies, and much more. This wide range of products will benefit the company in the future as its products will have demand from a wider range of consumers.
  4. Kellogg is starting to acquire more companies to further diversify its product offerings. Their sales of cereal and other core products have stagnated because of shifting trends. The company has recently acquired the owner of a healthy breakfast bar, RXBars. This will benefit the company in the future as it will offer products that are rising in demand.

Why You Should Not?

  1. Kellogg still has competition from other companies, especially PepsiCo. PepsiCo offers snack products under the Frito Lay brands and offers breakfast products under the Quaker Oats brand. These products directly compete with those that Kellogg’s offers.
  2. Kellogg is negatively impacted by trade tensions. These tensions raise the price of key commodities that Kellogg uses as ingredients and materials to manufacture its products. This causes uncertainty around pricing and it might cause Kellogg to raise the prices on some products or take losses.
  3. Kellogg has seen trends shifting away from cereals to healthier options like bars, smoothies, and different salads. This caused the sales of cereals and other core products to stagnate and caused the stock to underperform over the past couple of years. This has also stagnated the growth of revenue and profits. This will continue to hurt the company in the near term as the company reinvests profits to be able to acquire other companies. The graph below shows that revenues and profit growth for the company has gone down. In the financial year of 2019, the company reported revenues of 13.6 billion and profits of 960 million. In the financial year of 2019, the company reported higher revenues and profits at 13.55 billion and 1.34 billion respectively.
PHOTO CREDIT: Yahoo Finance

MY OPINION

In my opinion, I think that there are better stocks to invest in than putting money into Kellogg. Until they offer a solid product offering for healthier consumers, their stock might continue to underperform. However, company accusations to fulfill this goal seem promising and it might turn out well for the company.

--

--

--

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

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Featured Stories

Not a Bad Hair Day: On the Growing Hair & Beauty Market

How to get your startup featured on Bloomberg (we did it!)

Business Idea: There will be strong profits from this crop, know how?

GameStopped — The Battle For The Soul Of Wall Street

Three Charts That Explain Investors Are Not Short Term, They Are Just Skeptical

Bolly Heroes — Meet The Team, Ranjit Kumar: Chief Executive Officer (CEO)

INDUSTRY 4.0 score a bull’s eye

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
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.

More from Medium

The Batman (2022) — Review

The Road to Widespread 5G: Not Enough Power

The Road to Widespread 5G: Not Enough Power; 3 minute read time

How To Train Trip To Montreal This Summer On a Budget

How Mark Zuckerberg Made His First Million And His First Billion