General Mills, Inc. (GIS), ConAgra Foods, Inc. (CAG): Is This Company A Better Investment Than Kellogg Company (K)?

General Mills, Inc. (NYSE:GIS) offers 45 brands to consumers, including Wheaties, Cheerios, Betty Crocker, Chex, Fiber One, and Pillsbury. As you can see, several of its brands are household names. General Mills has also had to deal with declining volumes in some areas, but that has been made up for with increased pricing. Of course, if the consumer continues to weaken, then increased pricing won’t be an effective strategy. That’s why General Mills is so focused on the innovation route. For example, it recently launched Helper Skillet (Ultimate Hamburger/Chicken Helper) and Betty Crocker potatoes (real potatoes and cheddar sauce).

General Mills, Inc. (NYSE:GIS) held up slightly better than Kellogg during the Great Recession. It offers a better value at 18 times earnings (versus 24 times earnings for Kellogg), has a higher net margin of 10.4% (versus 6.4%), sports a stronger debt-to-equity ratio of slightly less than 1.0 (versus nearly 3.0 ), and yields 3.1% (versus 2.8%).

Then there’s ConAgra Foods, Inc. (NYSE:CAG), which offers popular brands like ACT II, Chef Boyardee, Healthy Choice, Hebrew National, Hunts, and Swiss Miss. ConAgra recently reported a strong quarter, with EPS and revenue jumping 17.6% and 33.7%, respectively, year-over-year. Acquiring Ralcorp has been a major contributor, and it’s likely to solidify ConAgra’s position in the market for a long time to come. ConAgra Foods, Inc. (NYSE:CAG) is also focused on launching new products, but there will be heavy spending associated with these new launches, which could have a short-term impact on the bottom line.

If you’re wondering about the all-time historical performance of these three stocks:

Kellogg data by YCharts

Conclusion

Kellogg is a strong company with a great history, as well as geographical and product diversification. And it’s likely to reward investors over the long haul, even if there are near-term dips. However, General Mills, Inc. (NYSE:GIS) is more diversified, its balance sheet is stronger, it has stronger margins, it’s more resilient, and it’s trading at a better value. Therefore, General Mills looks to be the best investment of this group at the present time. If the stock gets hit due to broader market weakness, consider slowly adding to your position.

The article Is This Company A Better Investment Than Kellogg? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.