This Blue Chip's Brands Are Turning Into a Trap

After nine decades in business, this consumer-staples giant is out of runway – and it's a risky bet for investors today... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] Editor's note: Trouble is brewing for this historic blue-chip stock. Today, in an essay from our corporate affiliate Altimetry, Director of Research Rob Spivey dives into why this venerable company is failing to grow... and reveals why it's a potential trap for investors. --------------------------------------------------------------- This Blue Chip's Brands Are Turning Into a Trap By Rob Spivey, director of research, Altimetry --------------------------------------------------------------- After more than 90 years in business, General Mills (GIS) probably thought it had seen it all... Until the 2021 supply-chain delays came along. The company is one of the world's largest food producers. You've almost certainly bought its products, which include everything from Cheerios to Yoplait yogurt and even Blue Buffalo dog food. But last year, you'd have been hard-pressed to find one of its most popular brands in stores – Totino's pizza rolls. Pizza rolls might seem like a simple snack, but they're surprisingly complex. In fact, they require 21 ingredients. So when supply-chain shortages made many of those ingredients scarce, General Mills had to get creative. The story of how it tackled this problem shows how innovative this company is – yet, as we'll see, this business faces more problems than its 2021 woes... --------------------------------------------------------------- Recommended Links: [When 2022 Ends, Which Side Will YOU Be On?]( While investors panic over rising inflation... a looming recession... and a devastating stock sell-off... the forensic accountant who predicted the 2008 and 2020 crashes just issued a new warning: Fortunes could be made and lost by the end of this year. And if you want to be on the right side of history, you need to act next week. [Click here for details](. --------------------------------------------------------------- [Until MIDNIGHT: Claim 1 Free Year of Retirement Trader]( "This is hands down my favorite income strategy and the single most valuable moneymaking secret I discovered during my decade working on Wall Street," says Dr. David Eifrig. He reveals this powerful, little-known "instant-cash secret"... PLUS a way for you to claim a FREE year of access (only until midnight tonight)... [right here](. --------------------------------------------------------------- Rather than sit by and miss out on millions of dollars in sales, General Mills got to work to find a new solution (and a new pizza roll). The company put together a team of scientists and supply-chain experts to determine what substitute ingredients would work in a pinch when the originals were hard to find. It's tougher than it sounds. Changing ingredients can also change everything from shelf life to nutrition content. But their efforts were a resounding success... General Mills now has 25 different ways to make the same pizza rolls. Today, you wouldn't even know that there were any problems to begin with. General Mills set itself apart from the competition by expertly navigating this hurdle... But while its solution was clever, its profitability leaves something to be desired. The company has historically produced an as-reported return on assets ("ROA") below 10%. That number has hovered within the 6% to 7% range since 2018. These are markedly pedestrian returns. Of course, at Altimetry, we know better than to take the as-reported numbers at face value. That's why we use Uniform Accounting. It's a method that helps us look under the surface... and filter out the distortions that plague traditional accounting. But while General Mills' Uniform ROA is significantly higher than its reported numbers, it has also stagnated. As you can see in the following chart, Uniform ROA spiked to 25% in 2018 – and stayed there. All of General Mills' efforts through fiscal year 2022 (which ended in May) have only kept returns in place. Take a look... This isn't getting any better, either. Our Altimeter tool – which provides easily digestible grades to rank stocks on their real financials – allows us to understand market expectations at a glance. The Altimeter gives General Mills a "C" for Earnings Expectations. That tells us the company's returns will remain stagnant compared to expectations. Even worse, the market has no idea. As-reported metrics make it look like General Mills trades for a 19 times price-to-earnings (P/E) ratio... below the 20 times market average. In reality, its Uniform P/E ratio is 26 times. This overvalued business gets a "D" Valuations grade in the Altimeter. Take a look... General Mills' approach to supply-chain problems was impressive. But after nine decades in business, this consumer-staples giant is out of runway. And any negative surprises could weigh on the stock... making this an investment that's not worth the risk. Regards, Rob Spivey --------------------------------------------------------------- Editor's note: This disorienting market can lead even the best investors astray. If you want to succeed, the decisions you make in the coming weeks can't just be good... They have to be perfect. That's why on Thursday, September 22 at 8 p.m. Eastern time, two investing legends are joining forces to announce the No. 1 step you should take right now for maximum potential profits... while most investors are still losing money. This online event is 100% free to attend, but a reservation is required. [Click here to learn more](. Further Reading In the early days of the pandemic, Wall Street fell in love with an overhyped company – and almost didn't notice a huge rally in a more traditional type of business. This comes down to a common bias in the financial world... [Learn more here](. Buying overvalued stocks is risky. But buying stocks just because they're cheap is dangerous too... And it can fool you into making critical mistakes. Read more about how to avoid this trap right here: [How the 'Thrift Shop Fallacy' Fools Us Into Buying Junk](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberrycustomerservice.com. 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