General Mills Continues to Show Why It's a Fortress Stock There are some stocks that fall into the category of fortress stocks. General Mills is one of them. With the stock likely to move higher, investors have an intriguing buying...

Value investors can buy this stock before the upgrade cycle kicks in

General Mills (NYSE:GIS) stock is up 7% since it posted third-quarter 2022 earnings after the market closed on March 23. We see this as just the start of the next leg up for a stock that looks primed to move past its 52-week high and will likely set a new all-time high.

The only reason that GIS stock didn't move even higher is because the company's revenue was a slight miss. That may also be the reason why investors are delaying in issuing new (and we suspect) higher price targets for the stock.

There are some stocks that fall into the category of fortress stocks. General Mills is one of them. With the stock likely to move higher, investors have an intriguing buying opportunity.

Passing Along Costs

I don't want to be insensitive about inflation. We all go to the grocery store, and I know that it costs me significantly more to buy the same amount of groceries. But when I put on my investor hat, I need to put my feelings about inflation aside. And that means asking what companies are likely to be able to pass along higher costs to consumers.

That's what you have with General Mills. Through the first three quarters of its fiscal year, the company was already on track to deliver higher full-year revenue than the prior year. But more interesting to investors is that the company raised its guidance.

The company also expressed confidence that they can pass along higher prices to offset its rising input costs. And if you look at the company's earnings deck (pages 17 and 18), I see a key reason why that confidence is not based on wishful thinking.

Showing Growth in Two of the Fastest Growing Sectors

Two of the biggest revenue drivers in the prior quarter came from the Pet and Foodservice segments.

Increased spending on pet care was trending prior to the pandemic. But with the onset of the pandemic, many families added a furry companion or two. And that means that this sector will maintain its strength for years to come.

And with Covid restrictions being lifted throughout the country it means a return to in-person learning. It may also be a harbinger of growth in hotel and restaurant stocks that are relying on the company's products.

Why Now is the Right Time to Buy GIS Stock

Depending on where you live, you may be experiencing a shortage of some items on store shelves. And General Mills told investors that the company is still dealing with supply chain disruptions.

On page 9 of the company's earnings presentation, General Mills indicates that the short-term disruptions are abating, but there is still some work to be done. And on the following page of the deck, it states that the company's input cost inflation outlook will be between 8% and 9%.

This means that the company is likely to start seeing an acceleration in revenue and earnings that would support a valuation that, at the moment, may look a little expensive. This may not be fully priced into GIS stock until the company reports full-year 2022 earnings in June. In the meantime, opportunistic investors should look at General Mills as a great opportunity to get a little growth and enjoy a solid dividend along the way.