Last year was a slow-growth year for cereal, but Americans aren’t starting their day on an empty stomach. Instead, they’re eating on the run, and sales of cereal breakfast bars and fast-food breakfasts are on the rise, says James Early of Motley Fool. The rest of the world is beginning to adopt our breakfast habits, too, he says. So investors should look in that sector to capture some of the profits.
Early likes Kellogg’s (NYSE: K; Price: $55.92), because 40 percent of that company’s revenue comes from bars and snacks that are cereal-based. He also likes McDonald’s (NYSE: MCD; Price: $86.54), because it already is established in the market of convenience breakfasts and has a higher profit margin on breakfasts than it has on other foods, and because it advertises heavily in foreign countries. McDonald’s has been working for years to condition Chinese, Russians and others to eat U.S.-style breakfasts, Early says.