Stock Spotlight: General Mills

How does a stock make it to our Featured Stock Spotlight? There are many ways, but being a high PowerRating stock from an industry with a high PowerRating is one of the best ones.

That's how General Mills (GIS@GIS | Quote | Chart | News | PowerRating) made it. With its PowerRating of 9 and its membership in an industry such as Processed and Packaged Goods that has a PowerRating of 10, General Mills is a stock that more investors looking for defensive options in a difficult stock market should know about.

Defensive stocks are stocks from companies that are expected to perform as well as or better than the average stock during times of slow economic growth or even recession. These are stocks from companies that produce products or provide services that do not require strong economic growth in order to be in high demand. Medical and healthcare stocks typically fall into this category, as do stocks of companies that manufacture personal products for health and beauty. But another type of stock that falls into this group are stocks from food and beverage companies -- like General Mills.

The only thing more impressive than General Mills PowerRating of 9 is the Processed and Packaged Goods industry's PowerRating of 10. To put this 10 rating in perspective, consider this: industry groups with PowerRatings of 10, according to our research, have produced average annualized returns of more than 35% since 1995. By comparison, the average industry group produced average annualized returns of approximately 14.61%. This means that the top rated industries, the best of the best, have more than doubled the returns of the average industry.

Before looking more specifically at General Mills, let's understand how important the stock's 9 PowerRating is for investors looking for stocks with a strong -- if not overwhelming -- likelihood of being higher in a year's time. We looked at thousands and thousands of simulated trades between 1995 and 2006, and found that stocks with PowerRatings of 9 tended to be higher one year later more than 79% of the time. The average stock, on the other hand, has tended to be higher after one year less than 68% of the time.

In addition to being more reliable, 9-rated stocks have also outperformed the average stock based on our research. Stocks with PowerRatings of 9 tended to gain more than 18% after one year. This performance is all the more impressive compared to the average stock, which tended to gain between 12-13% after one year.

General Mills is a major worldwide manufacturer of packaged consumer foods and snacks. Some of the company's most well-known brands include Betty Crocker and Bisquick in the baking arena,Cheerios and Wheaties in the cereals group, as well as Progresso Soups, Haagen-Dazs ice cream, and Yoplait yogurt.

The stock has been trading below its 200-day moving average since the second half of December. The stock bottomed at the end of the month with a PowerRating of 8, and the stock's PowerRating increased to a 9 early in January as the stock began rallying from the low 50s to the mid 50s. GIS's 200-day moving average waits a few dollars higher just south of $57.