Cramer: Inflation Hits General Mills
With commodity prices rising, inflation has hit grocery store shelves. Yet, some companies are handling the pressure better than others. Jim Cramer isn't sold on cereal-maker General Mills (GIS) , despite the company's iconic brands. He does however like the smaller, more niche B&G (BGS) Foods.
Cramer is concerned about it General Mills, as high commodity prices continue to put pressure on margins and prices to consumers. Cramer also thinks the company paid too much for the Yoplait acquisition. He thinks without the positive guidance from General Mills CEO Kendall Powell, the stock would be trading lower.
"The guidance was robust and he did talk about the margin pressure peaking this quarter. Now if oil goes up and so much of his margin pressure is oil, I don't know where he gets that but I think that people want to continue to say listen, stick with us. People are not going to pay 5-6 bucks for a box of cereal," Cramer said.
He likes B&G better, which he says has commodity prices under control. He said if he were an individual investor he would take some stock in the company. B&G includes brands such as Emeril's, Ortega and Brer Rabbit.
"The one I would look at is B&G foods and it's small but who cares. It's got a great yield, just boasted dividend, very big. They have commodity prices completely under control and they are niche. Our viewers can be niche, they don't have to be broad," Cramer said.
Cramer also likes Kellogg (K) , which recently acquired Pringles from Proctor and Gamble and Kraft, which recently launched its global snacks business Mondelez International. Both stocks are in the Action Alerts Portfolio, Cramer said.
"Alternatively, go with Kellogg because of the terrific acquisition. They can rationalize the acquisition in their snacks business. Or you go to Kraft." Cramer said.