General Mills, Inc. (GIS): Why This Cereal Stock Makes a Great Long-Term Holding

General Mills has a stronger ROE of 28.4 (vs. the average of 12.4). All this indicates General Mills has an efficient management. From valuation perspective, General Mills has a lower P/E of 17.9 and P/B of 4.5 (vs. the industry average of 34.6 and 5.2). From a cash flow standpoint, General Mills generates a strong operating cash flow of $2.89 billion with a levered free cash flow of $1.85 billion and currently offers an annual dividend yield of 2.71%.

How to Invest

General Mills, Inc. (NYSE:GIS) had been trading in the range of $36.75-$48.95 in the past 52 weeks. With its high margins, strong ROE, increasing and inexpensive cash flow, General Mills remains a great long-term holding. Further, with a portfolio of well-known, reputable brands and an expansive global distribution network, General Mills is well-positioned for any market condition.

For bullish investors might consider a credit put option spread of July 20, 2013 $42/$45 puts, which will allow investors to gain some upside credit premium, or acquire shares at a price below $45 upon the options’ expiration. Investors can also review the following ETFs to gain exposure to General Mills, Inc. (NYSE:GIS):

Dynamic Food & Beverage (PBJ), 4.90% weighting

S&P 500 Low Volatility Portfolio (SPLV), 1.32% weighting

Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

The article Why This Cereal Stock Makes a Great Long-Term Holding originally appeared on Fool.com and is written by Nick Chiu.

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