Kellogg Company (K) Stock Can’t Keep Soaring Forever

Challenges for Kellogg
Still, Kellogg Company (NYSE:K) will still have to deal with obstacles to its future success. A recall of its Mini-Wheats cereal, due to alleged metal-mesh contamination, raised the specter of quality-control issues for the company, and although a proposed $4 million settlement would be relatively minor, the reputational damage could prove more extensive.

The bigger challenge Kellogg faces is simply getting more people to buy its products. Adults have turned away from cereal and, in response, initiatives like its Breakfast To Go dairy drink seek to cash in on the wish for adults to have more on-the-go alternatives to sit-down breakfast cereal. With its strong brand, Kellogg has the capacity for further growth if it can produce innovative products to meet customers’ needs and wishes.

Can Kellogg grow fast enough?
Even though prospects for Kellogg look good, Kellogg stock simply can’t sustain its recent upward moves forever. With forward earnings multiples rising into the upper teens despite single-digit growth expectations, Kellogg stock looks primed for at least a short-term pullback at some point.

The article Kellogg Stock Can’t Keep Soaring Forever originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Berkshire Hathaway. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Berkshire Hathaway and The Procter & Gamble Company (NYSE:PG). The Motley Fool owns shares of Berkshire Hathaway.

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