So now they like Kellogg (K) . Well, they have to like something, don't they? I mean, the huge gaggle of consumer products analysts have to put something on the recommendation list, and I guess it might as well be Special K, down 15% for the year with a new CEO and a sense that the darned stock, if not the business, has hit bottom.
I know everyone is sick of conference calls by now, but I have to tell you that this one heralding the new CEO, Steve Cahillane, was a real doozy. Cahillane, late of Nature's Bounty, the minerals and supplement company, was incredibly out of body.
Here you have a company that is celebrating that its brands are declining at a slower pace. It is heralding Pringles for putting up positive numbers. Pringles. Tell me you don't think they are made of Soylent Green. The company's spinning a tale that getting rid of Direct Store Delivery -- something that fellow snack company, Frito Lay, swears by -- is good for the numbers. And it is trumpeting the fact that cereal simply isn't doing as badly as it once was.
And the street is lapping it up, with almost universal praise and upgrades. Amazing, considering that at one point an analyst asked Steve why, given the declining category and the pressure on the consumer packaged goods businesses, he even took the job. He loves the culture, he said: great brands, iconic name. I said to myself, yeah, if you are my age...but, so was Sears (SHLD) .
Look, I don't want to be too cynical. That costs you money. I bet he does a good job in restoring Raisin Bran using marketing that says it is good for you. Maybe he reignites the most fallen of brands, Special K. Perhaps he's the guy who makes cereal more of an afterthought by making bold acquisitions.
The simple fact is, though, that there was a time when Kellogg was a fabulous growth company, where it didn't need zero-based budgeting or endless cost cutting. What it needed was a dedicated worldwide salesforce and distribution team, because demand was so strong worldwide.
Now, though, they sell a product that seems like it is in a time warp, one that my own mother did her best to have us eat healthy, and we didn't know we weren't.
Kellogg is a company that makes Eggos and Pringles. I am old enough to remember when each was invented. Both were revolutionary because of convenience. We don't care about convenience now. We care about health. And while anyone can spin a health story -- there's even a cynical moment on the call when they talk about driving "the health credentials of the category" -- can we stipulate that natural and organic are two words that don't come to mind when we think of Kellogg's product line-up?
So, the analysts who cover this once great growth category have to find something to love. How about a 3% yielder where the future does look brighter than the past?
How about Kellogg.
And that's how a stock in this group can spike after a long road down, a road I believe will be less traveled by buyers a few points higher than it is now.