General Mills, Inc. (GIS): This Stock Is Downright Delicious

Rumors are floating that billionaire activist Nelson Peltz might be looking to push PepsiCo, Inc. (NYSE:PEP)’s snack food business and Mondelez to merge. This is big news, as I think this could be a big positive for both companies. The stock is down over 5% during the past month. This could be a good time to buy into the stock.

Mondelez has reaffirmed its 2013 organic revenue growth target of 5%, while upping its earnings guidance to $1.55 to $1.60 per share. At the mid-point, that would be 13% year over year EPS growth. This international snack company also pays investors a 1.8% dividend yield on a 50% payout of earnings.

Hedge fund activity

Going into the second quarter there were a total of 18 hedge funds long Kellogg, which was a 13% increase from the first quarter. The hedge fund with the largest position includes billionaire Ken Griffin of Citadel Investment Group, having a $268 million position (check out Citadel’s high yielders).

General Mills, Inc. (NYSE:GIS) had 34 hedge funds long the stock, which was an impressive 31% increase from the previous quarter. Top hedge fund included Ric Dillon’s Diamond Hill Capital, with a $181 million position (see Diamond’s top picks)

Meanwhile, Mondelez had the most interest from major hedge funds, with 69 hedge funds long the stock. This includes billionaire activist fund Trian Partners with the largest position, a $1.2 billion position that makes up 26% of its 13F portfolio (see Trian’s top pick).

Bottom line

The various snack foods companies are poised to perform well with the urbanization of various emerging markets. I tend to like General Mills, Inc. (NYSE:GIS) the best given its low volatility and impressive dividend. Mondelez is still an impressive growth story with activist investor support. I also think Kellogg could be worth taking a look, as the Pringles acquisition could still be over-discounted — meaning the long-term benefits could be better than expected.

Marshall Hargrave owns shares of Mondelez International (NASDAQ:MDLZ). The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article This Stock Is Downright Delicious originally appeared on Fool.com and is written by Marshall Hargrave.

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