Two Ways To Play: Kellogg's Snap, Crackle, Price Pop
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With the price of corn, wheat and other commodities falling in recent months, related foods like cereals should be falling as well, right? Not so fast, says Kellogg (K). According to Bloomberg, the maker of Froot Loops and Rice Krispies intends to increase breakfast-cereal prices for the third time in a year on account of rising energy and ingredient costs.
Kellogg CEO David Mackay recently told reporters the company expects sugar, rice and packaging materials to become more expensive through 2009. Consumers can expect price hikes to take effect January 18th and be in the low- to mid-single digit range on a percentage basis.
Meawhile, General Mill's (GIS), Kellogg's main competitor, hasn't announced pricing changes and declined to discuss any plans to do so in the future.
From the Bull Pen: It's too early to say whether Kellogg has bottomed. But those bullish can set an initial position here with a stop below the 52-week low ($40.32.)
From the Bear Cave: Bears can consider Archer-Daniels Midland (ADM). The stock is headed into significant resistance at its 200 DMA ($31). One option is to attempt an initial position if it reaches that level.
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