Kellogg's Looks Good For The Long Term (K)

Everybody knows Kellogg Company

. Most people eat one of its products everyday. Whether you're chowing down on Kellogg's cereals, Keebler cookies, Cheez-Its, Pop-Tarts, or Famous Amos cookies, these are all products of one of Michigan's largest and healthiest employers. Kellogg employs nearly 31,000 people across the globe, with a good portion of them located right in Michigan. The company's shares have not performed well this year, having fallen from $53 at the beginning of the year to around $51 as of the time of this writing, not including dividends. If you take dividends into account, shares are a little bit better, down around 2% on the year. So if the economy is starting to get better and people are continuing to eat Kellogg products, then why the stagnant share price? In a slow growth economy or a recession, shares of consumer staples such as Kellogg tend to outperform, as evidenced by the outperformance of Kellogg versus the S&P 500, seen in this

The economy has returned to a normal growth cycle, whether it feels like it or not. It will take some time for people to see it on an everyday basis, but it will come. The economy will get even better in 2011 than it was in 2010, as time and economic policies begin to really kick into gear. Unfortunately for many of us, there is little we can do about it, other than wait and continue to pursue opportunities. As such, in a growing economy, shares of consumer staples tend to under perform, as money moves into higher growth companies. This is not to say that Kellogg shouldn't be part of your portfolio, but not as large as it may have been a few years ago. Kellogg will still continue to grow, as population growth and inflation start to take their natural courses, and the company innovates with new products. It just won't grow as much. In the meantime, Kellogg pays investors to wait with a healthy dividend, currently yielding at 3.2%. Investors can reinvest these dividends back into Kellogg, giving them more shares as the company continues to grow over time. The company has a devotedly loyal customer base, strong management and solid fundamentals. One of the best financial measures is return on equity (ROE), as it measures how effectively the company is spending its money. Kellogg has a 57% ROE, compared to a 29% ROE for General Mills

, and a 9.1% ROE for Ralcorp Holdings Inc.

. This is far higher than the industry average, and it shows Kellogg's management team is doing an excellent job. With metrics like these, owning shares of Kellogg is an investment that can be bought and not worried about when you go to bed. As Tony the Tiger says, "They're great!!", as long as you don't put all your frosted flakes in one bowl.