This growth was planned and orderly, and it was aided by uncommonly solid product development with high-level, sophisticated market research. This year, GIS will introduce almost 100 new products, and their debuts are quite likely to be enormously successful, a result of smartly ramped-up marketing, good advertising and effective couponing. Management has written the textbook in this field. In the coming four years, revenues should top $21 billion; earnings could grow to $3.65 a share; net profit margins may exceed 11.5 percent; and the dividend could rise to $1.70.
For investors who believe the current “rah-rah, go-go” market is too volatile and prefer investment dependability in their long-term plans, GIS could be an excellent selection. As investors realize that market volatility can be counterproductive, that today's risks are too difficult to manage and that results are temporary, GIS will come to be a more attractive investment.
Kendall Powell was appointed CEO in 2007, after 25 years in the trenches with GIS. He is the quintessential manager and moves smoothly among company bankers, the board, management, marketing, distribution and the factory floor, where he learned some of the ropes. He's mindful that GIS' future depends on growing its market share. Powell will continue to demand new products from research and development and will seek expansion opportunities to acquire complementary products. Powell, by the way, owns 447,000 shares, and like too few CEOs, he earned those shares based on solid and lasting performance.
Though I like the stock and think it could trade in the $80s in the coming five to six years, I feel the current $49 price tag is too high. I believe $41 to $43 is a fair entry point for long-term investors.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at email@example.com.