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Motley Fool: General Mills has the goods to deserve long-term look

Sun., Oct. 14, 2012

While many people may know General Mills (NYSE: GIS) for its variety of delicious consumer goods products (Cheerios, Yoplait, Haagen-Dazs and Nature Valley, to name a few), many fail to think of it as a profitable stock. But after good news in its latest earnings report, more people may be paying attention to this often-overlooked company.

The company’s earnings rose an impressive 35 percent over year-ago levels, while revenue advanced 5.3 percent, largely due to higher volume. Sales at the company’s international segment grew 27 percent to $1.09 billion, which created an impressive 56 percent boom in that division’s operating profit.

General Mills has better revenue growth and a larger operating margin than many of its competitors, not to mention a solid dividend yield recently near 3.2 percent. Combined with a decent P/E ratio, it looks like a solid long-term investment.

Ask the Fool

Q: When a stock is reported as having risen or fallen a certain amount, from what price is it up or down? – W.R., Spartanburg, S.C.

A: When you hear that shares of Help Depot (ticker: RUOK) are down 3 1/2, that means they’re off 3 1/2 dollars from where the stock traded at the end of the last trading session. So if RUOK closed at $75 per share yesterday and it’s trading around $71 1/2 right now, it’s down 3 1/2.

My dumbest investment

Some time ago, my money in a managed brokerage account wasn’t doing too badly. When I got divorced, though, I tapped some of it to live on for a while, and I began worrying about the account’s hefty annual fee. An old friend introduced me to her boss at a brokerage, who said that at age 55, I should sell everything and buy investments such as annuities to preserve my assets. I agreed, but soon realized that my money was locked up and I could withdraw only a certain amount annually. Also, I suddenly owed a lot in capital gains taxes. There was time to undo my decision, so I did. Even at 55, I was firing up my career. – H.H., via email

The Fool responds: Some annuities can serve some folks very well, but learn a lot about them and any other investments before buying. Look closely at fees, restrictions, penalties and limitations on how well they can reward you. At 55, you may have 10 to 20 more working years, and it’s reasonable to still keep some money in solid stocks.

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