Trend Technician

General Mills is an interesting analysis candidate.  Many people like to disregard the fundamentals and simply follow the trend, but I see no reason not to put every component in your favor.  If two stocks have similar charts and one has no debt and a great dividend and the other the opposite, I’m going to be much more reluctant to go long on the second one.  Thus let’s start out with some appealing factors about General Mills from a fundamental standpoint.

The first thing that grabs your eye is that it’s sporting a 3.2% dividend yield.  Dividends are particularly appealing in an era of wild uncertainty.  When compared with a stock with no dividend, a stock like this seems to have a much more solid price floor.  A P/E of 15 is not particularly good or bad in this environment.  Lower multiples have been fairly common these days, and I’d like to see it lower; but General Mills is a very well-known stock, and 15 isn’t outrageous.  Interestingly it converts 9 cents of free cash flow for every 1 dollar of sales.  It also has stable margins.  Ultimately all this suggests a boring, but relatively safe bet in the current market. [More]