General Mills, Kroger Appetizing

For another Street.com Ratings story on a similar theme, check out It's Time to Play Ketchup.

There are few American brands more recognizable than General Mills (GIS Quote). Its staples include Cheerios, Wheaties, Pillsbury, Chex, Colombo, Betty Crocker and Green Giant. They are weathering the economic storm better than most other brands.

General Mills employs incredible diversification. Simply put, if it is edible, the company probably makes it. Some heavy-hitters, like Progresso soup and breakfast cereals, have plenty of competition from other well-known brands, such as Campbell Soup (CPB Quote) and Kellogg (K Quote). However, the competition has not fared as well as General Mills has in the recession. Shares of Campbell and Kellogg are down 19.2% and 18.4% this year, respectively, while General Mills has risen 7.6%.

While all three of the stocks are rated "buy" by TheStreet.com Ratings, General Mills scores substantially higher in our quantitative rankings in regard to risk, being minimal, and reward, which is ample.

Upon review of the financials for General Mills, the knee-jerk reaction is to be alarmed by the amount of debt. With liabilities accounting for 66% of its capital structure, trouble could be brewing, given current credit conditions. It would be disastrous if the company could not refinance this debt due to frozen credit markets.

However, $3.7 billion of the $4.3 billion in long-term debt will not need to be refinanced until at least 2012. This allows plenty of time for credit markets to thaw before the company needs to seek significant financing.

What's more, the rate paid on debt is extremely low, below 4%. Due to various interest-rate hedges and a strong credit rating, General Mills has been able to finance its operations more cheaply than most other companies.