General Mills, Inc. (GIS): A Cheap Food Stock to Buy According to Hedge Funds

General Mills, Inc. (GIS) has been a staple in the food industry for over a century, with a portfolio of iconic brands that include Cheerios, Lucky Charms, and Pillsbury. Despite its long-standing presence, the company has faced recent challenges, with its stock price underperforming the S&P 500 and analysts downgrading their ratings. However, hedge funds and other institutional investors have been quietly accumulating shares of General Mills, indicating a potential turnaround in the company's fortunes. This article explores the reasons behind this renewed interest in General Mills and whether it presents an attractive investment opportunity.



Undervalued Stock

General Mills' stock price has decreased by -5.59% in the last 52 weeks, and the company's trailing PE ratio is 13.19, which is lower than its 5-year average of 15.23 and 10-year average of 16.45. This undervaluation relative to its historical averages and industry peers suggests that General Mills' stock may be poised for a rebound as the company's growth initiatives gain traction.

Strong Financial Performance

General Mills has a history of strong financial performance, with a consistent track record of revenue growth and earnings per share (EPS) growth. In the last 12 months, the company generated $19.90 billion in revenue and $2.60 billion in net income, with an EPS of $4.60. This financial strength provides a solid foundation for the company to invest in growth initiatives and weather economic downturns.

Dividend Growth

General Mills has a history of dividend growth, with a 5-year dividend growth rate of 1.69%. The company's current annual dividend is $2.40, which amounts to a dividend yield of 3.96%. This dividend growth aligns with the long-term, sustainable investments that generate income, which is a key focus for many hedge funds.

AI Integration

General Mills has been investing in AI and data analytics to improve its operations, marketing, and product development. The company uses AI to optimize its supply chain, predict consumer trends, and enhance its digital marketing efforts. This integration of AI into the company's operations positions General Mills as a potential beneficiary of the AI revolution, which is a key focus for many hedge funds.

ESG Focus

General Mills has a strong commitment to sustainability and social responsibility, as evidenced by its efforts to reduce its environmental impact, support local communities, and promote diversity and inclusion. This focus on ESG factors aligns with the investment philosophy of many hedge funds, which seek to invest in companies that are not only profitable but also responsible and sustainable.

Analyst Ratings and Price Targets

Despite the recent downgrades, some analysts remain bullish on General Mills' prospects. Mizuho Securities recently adjusted its price target for General Mills to $65 from $72, maintaining a neutral rating. Stifel Nicolaus also cut its price target on General Mills to $78 from $82, but kept its buy rating. The average price target for General Mills is $67.67, which is 11.63% higher than the current price, indicating that analysts expect the stock to rebound in the coming months.



In conclusion, General Mills' undervalued stock, strong financial performance, dividend growth, AI integration, and ESG focus make it an attractive investment opportunity for hedge funds and other institutional investors. As the company's growth initiatives gain traction and its stock price rebounds, General Mills may present an excellent entry point for long-term investors seeking exposure to the food industry. However, it is essential to monitor the company's financial performance and valuation ratios over time to ensure that the investment thesis remains valid.