Apple, Boeing, General Mills, Snapchat

“Although the stock has appreciated already ~20% YTD, pressure still exists in the company’s snack bar and soup categories, and divestment dilution risk looms, the core U.S. base business at General Mills seems to have stabilized and the opportunity with Blue Buffalo remains underappreciated, supported by our proprietary dbDIG survey and revenue capture analysis… Driven by years of subpar growth and missed guidance expectations, we believe there’s been some reluctance to buy General Mills‘ shares despite strengthening U.S. retail data trends and margin-accretive distribution and share gain potential with pet at Walmart… That being said, we believe upside exists, as a margin mix positive Blue combined with a more stabilized base business implies not only that the top line could accelerate and margin could expand in FY’20, but also that consensus could simply be too low… Coming out of our company HQ visit in October, we said that the stock would likely rebound nicely if management’s expectations around price/mix, innovation-led distribution gains, and cost savings/synergy potential played out in the back-half of this fiscal year… We also said that we wanted to see sustainable gains in the base and learn more about the Walmart Blue launch before becoming incrementally bullish… Given we’ve watched base momentum stabilize and have better perspective on Blue Buffalo, we finally upgrade the shares to a Buy, driven by an overly discounted valuation vis-à-vis go-forward growth potential relative to peers… The current state and positioning of Mills doesn’t have to be a reflection of the past, in our view, so nor should valuation…”

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