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No. of Recommendations: 0
Good morning Fools!

In my (mostly feeble) attempts to find a winner RM
stock, I stumbled across Kellogg's (K), the undisputed
champion of breakfast cereals. Does this sound like
a potential RM stock?

1) Owns 32% of US market share for its products;

2) Makes 7 of the top 10 breakfast cereals;

3) Has products as diverse as frozen waffles (Eggo),
cereal bars (Nutri-Grain), pastries (Pop-Tarts),
bagels (Lenders), snacks, (Rice Krispies Treats), and
of course, breakfast cereals.

4) Makes products in 20 countries and sells them in
160

And now, for your perusal, are the financials:

  Kellogg's Company                              General Mills   Quaker Oats  <Fill in Name>
                 Current PeriodYear-ago PerioYear-over-Year    Current Period  Current PeriodCurrent Period
                     Dec-98        Dec-97        Growth            May-98          Dec-98        <Date>
Income Statement . . .
  Sales              6,762,000     6,830,000      -1.0%              6,033,000     4,842,000
  Cost of Goods S    3,282,000     3,270,000      0.4%               2,389,000     2,374,000
  Net Income           502,000       546,000      -8.1%                422,000       284,000
  Shares Outstand      408,000       413,000      -1.2%

Balance Sheet . . .
  Cash & Equivale      136,000       173,000     -21.4%                  6,000       327,000
  Current Assets     1,496,000     1,467,000      2.0%               1,035,000     1,115,000
  Short-term Debt      620,000       368,000      68.5%                264,000        41,000
  Current Liabili    1,718,000     1,657,000      3.7%               1,444,000     1,009,000
  Long-term Debt     1,614,000     1,415,000      14.1%              1,640,000       795,000
                                                                              1             1             0
Margins & Ratios . . .                                                                                     Competitors' Average
  Gross Margins           51.5%         52.1%     -0.7                    60.4%         51.0%                   55.7%
  Net Margins              7.4%          8.0%     -0.6                     7.0%          5.9%                    6.4%
  Cash-to-Debt             0.06          0.10    -37.3%                    0.00          0.39                    0.12
  Net Cash           -2098000.0    -1610000.0      N/A               -1898000.0     -509000.0              -1203500.0
  Fool Flow Ratio          1.24          1.00     23.4%                    0.87          0.81                    0.84


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Ranking Rule Makers

1) Brand          Points (0-1)                                3) Financial Dire Points (0-3)
Familiarity                   1                               Sales Growth                  0
Openness                      1                               Gross Margins                 2
Optimism                      1                               Net Margins                   2
Legitimacy                    1                               Shares Outstandin             3
Inevitability                 1                               Cash-to-Debt                  0
Solitariness                  1                               Fool Flow Ratio               0
Humor                         1                               Expansion Potenti             2
  Subtotal                    7                                 Subtotal                    9

2) Financial Loca Points (0-2)                                4) Monopoly Statu Points (0-4)
Mass Market Habit             2                               Gross Margins                 0
Gross Margins                 1                               Net Margins                   2
Net Margins                   1                               Net Cash                      0
Cash-to-Debt                  0                               Fool Flow Ratio               0
Fool Flow Ratio               1                               Convenience                   4
Your Interest                 2                                 Subtotal                    6
  Subtotal                    7
                                                              5) Your  Enjoymen             1

                   Total Score             30  Third Tier


A few points:
The gross margins, net margins, and Flowie are all in
line with RM criteria (although they should have received
a point for Flowie < 1.25 on spreadsheet and didn't --
not sure what happened there).

Meanwhile, cash-to-debt is not very good. Also, I'm not
totally convinced that General Mills isn't a better
company to look at based on their stats...

Does anyone have any thoughts? This seems like a very
competetive industry, do any of these companies seem
like RM companies?

Chad
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