Post Could Be the Next to Go

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Foolish readers who fondly remember hearing Euell Gibbons say that Post Grape Nuts cereal "tastes just like wild hickory nuts" will be interested to know that Kraft Foods (NYSE: KFT) is reportedly selling the Post cereal brand to Ralcorp Holdings (NYSE: RAH), a manufacturer of private-label food products including cereals and cookies.

In addition to Grape Nuts, the Post cereal brand includes such household names as Shredded Wheat, Honeycomb, and the star of my favorite singing raising commercial -- Raisin Bran. The deal is reportedly worth about $2.8 billion; shares of both companies rallied Monday on the news.

Kraft is one year into a revitalization effort to get its top line growing again. In its most recent quarter, the company showed some solid sales growth, although dairy cost increases sent profitability into the dump. Rising commodity prices have recently taken a bite out of profits at Kellogg (NYSE: K) as well, although other branded consumer product companies like Colgate-Palmolive (NYSE: CL), Procter & Gamble (NYSE: PG), and Unilever (NYSE: UL) are finding a way to grow both the top and bottom lines despite higher costs.

Post would be one in a series of older brands the company has shed in recent years. Last year it parted company with Minute Rice and Milk Bone. Brand casualties this year include Cream of Wheat and Fruit2O.

So, don't be a nut. Remember to be careful when stalking wild asparagus, and rest assured that camouflage is not required to invest in the stock market.

For more doings at branded product companies, check out:

• Procter & Gamble & Lose
• Who Has the Best Brands?
• Stocks for Mom: Kraft