For many years, cereal giant Kellogg's (K) - Get Report delivered the goods for investors.

Solid returns for the past four years and robust dividend growth with healthy yields have offered security and stability.

But this positive track record looks poised to hit a roadblock. The 110-year-old company faces challenges such as slowing growth and a lofty valuation.

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K data by YCharts

Let's delve a little deeper into why Kellogg's is among a group of vulnerable stocks.

There is no doubting the brand recognition of Kellogg's and its diverse portfolio of food products including cereal, cereal bars, crackers, fruit-flavored snacks, frozen waffles and toaster pastries. The company's list of venerable brands includes Eggo, Frosted Mini-Wheats, Pop-Tarts and Rice Krispies.

However, looking at the company as an investment option is a different story. Some think growth is petering out at Kellogg's.

Although revenue rose to about $13.5 billion last year from $13.1 at the end of 2011, net income declined by about half to $614 billion from $1.23 billion.

In fact, analysts don't see the company's revenue improving meaningfully this year or in 2017. 

The company's operating margins are down from the mid-teens to about 8%.

The U.S. dollar looks likely to continue strengthening, affecting sales for the company.

In addition, the decline in consumption of ready-to-eat cereals is a definite reality. The category has already experienced years of a gradual volume slump in developed markets including Asia and North America.

One positive is that the company is reviving free cash flow (more than $1 billion a year). But the flat revenue and drop in profits look like they will catch up with Kellogg's.

Meanwhile, the company's shares look pricey. At a price-earnings/growth ratio, Kellogg's is steeply priced at 4.38, compared with the industry's PEG ratio of 2.64.

The company's shares are overvalued compared with competitors ConAgra Foods (PEG ratio of 2.77) General Mills (3.68) and PepsiCo (3.25).

After rising by 13.58% over the past 12 months, the company's shares offer little upside. The 12-month median price target culled from 17 analysts tracking the stock is $77, less than a 5% increase from its current price.

There is little merit in buying the company's shares at present. With debt levels rising (already near $8 billion), income stagnant and profits dropping, its business fundamentals are set to deteriorate.

This would obviously affect the company's lofty valuations and ultimately bring down its share value.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.