Kellog (K-N)

Don't buy. It had a nice, not big, little run, so take profits. Mondelez is better.

They took over Pringles last year. This whole space has been extremely challenged. They struggle to grow and particularly in the cereal space. They are having trouble because people's' preferences have changed. There are higher raw materials costs. We are moving away from snacks as well as cereals. Some of these tried to attract investors with high returns of capital. In fact they are just giving back your own capital and not producing enough to cover these big dividends. We should see it 12% lower next year.

If you are holding a capital gain, he would consider taking some profit. There is commodity pricing pressure with distribution issues. He would move on to greener pastures.

The only things working this year is everything that is defensive. On the back of that, this company has seen some nice price movement. 50% of their revenue comes from cereals, so the whole trend of people trying to get away from carbs isn’t really helpful to them. A good quality company. She doesn’t see a ton of upside.

His model price is $59.28, a negative 8%. These are wonderful names in a portfolio and he thinks they go sideways. If it got a nice downdraft year, he would be a buyer of the stock. 3% dividend yield.

General Mills (GIS-N) or Kellogg’s (K-N)? Primarily focused on what he considers junk food. The consumer has become more educated. His concern with this company is that they have not adapted to the healthy consumer preference. Put up almost $2 billion in debt a few years ago to buy Pringle. If you look at the cash flow that goes to servicing that debt and their dividend, there isn’t a lot of cash for new growth catalysts. General Mills would be his preferred play.

(A Top Pick April 22/14. Down 7.3%.) Broke below a head and shoulders pattern yesterday. The period of seasonal strength generally is from April through until November. It is definitely time to step aside and get out if you own.

Would be careful of this because people are eating less cereal. The next generation are carbohydrate conscious so cereal demand is not going in their favour. Trading at a high valuation.