There's something about the stable, predictable nature of the cash generated by a consumer foods company. And with a business that has been around for almost 100 years, General Mills (NYSE:GIS) is one of the best. In an age when stocks move up, down, and all around, it's comforting to own this type of blue chip.

But even for a company as durable as General Mills, there are catalysts that could cause its stock to rise. These drivers are a must know for investors looking to add this company to their portfolio. So without further ado, here are three reasons General Mills stock could pop. 

1: Annie's becomes a powerhouse
General Mills recently agreed to acquire natural foods maker Annie's (NYSE:BNNY) for around $820 million. The deal provides it with a greater foothold in the organic space. From Jeff Harmening COO of General Mills U.S. Retail, "Annie's competes in a number of attractive food categories, with particular strength in convenient meals and snacks -- two of General Mills priority platforms."

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Source: annie's.com. John Foraker Annie's CEO.

Annie's generated more than $200 million of revenue and around $25 million in operating profit in its most recent fiscal year. For context, General Mills organic division did around $330 million in sales, so Annie's will add a nice chunk to that division. 

But more than that, there are serious positive trends behind natural and organic foods, it's the sweet spot in the consumer space. I say that because Annie's sales and profits have increased dramatically over time. According to the Motley Fool CAPS page, Annie's revenue was up 20% and earnings were up over 30% year over year. General Mills' sales and profits were about flat to last year. Overall, I love this deal for General Mills. It's exciting to think what may become of Annie's hustle, once it's back by General Mills hustle.

2: Priority platforms continue to build share with growing consumer groups
For investor convenience, General Mills has laid out its key priority platforms, cereal, snacks, biscuits, mixes, yogurt, and frozen breakfast. If we break down all the products across General Mills entire product portfolio, they generally fall into these categories. In fact, ready to eat cereal, snacks, yogurt, dough, and baking aisle products worked out to be 73% of its sales last year. So the performance of the stock will be partially based on how well those categories continue to perform.. Last quarter, the combined revenue for these products was up 5%, which is healthy considering General Mills overall sales were about even year over year. 

Management has also identified its key consumers. They are multicultural U.S. families, a growing middle class in emerging markets, consumers over 55, and millennials. Frankly, the performance with these audiences is not only critical for General Mills, but for all food companies. 

So General Mills plans to focus its marketing spend and innovation of its priority platforms on these consumer groups. In the last conference call CEO Ken Powell said:

As we move into fiscal 2015, our No. 1 priority is to accelerate top-line growth. We'll do that by sharpening our "consumer first" mind-set with particular focus on four growing consumer groups: the growing middle class in emerging markets, U.S. multicultural families, millennials, and consumers over age 55. With these growing consumer groups and our broad portfolio there are plenty of growth opportunities and our plan is to go out and get them.

Whether its digital marketing, (which particularly appeals to millennials) or more high protein product offerings, General Mills is putting its best foot forward to zero in on its core customers. The success of these campaigns and new products will go a long way to determining the direction of the stock.

3: International markets continue to do well
The American market is saturated and it's tough sledding for food companies to achieve any meaningful growth. Last year General Mills U.S retail pound volume was flat and sales of $10.6 billion was the same as the year before. But International revenue was up 4% because of higher pound volume. The Asia/Pacific region grew 9%, which clearly outperformed other areas where General Mills has a more established presence.

For General Mills, China is a strength. Last year, the company did a terrific job in China as it earned double-digit sales growth. This compares well to China's GDP, which was up 2.2% last year. GDP growth is a nice gauge for economic health, General Mills products cover a lot of food categories, so it's interesting to compare the two.

Bkg Gelato

Source: Haagen-Dazs. 

For color, the Chinese seem to be particularly into Haagen-Dazs, and frankly: Who isn't? In the latest conference call CEO Ken Powell specifically mentioned Haagen-Dazs in China and that plans are to offer more flavors in more areas. Management will also support the brand with more marketing spend.

Foolish final words
In my opinion, the three catalysts to push General Mills higher is its continued excellent performance in China and other emerging markets. But the continued focus of its priority platforms on the four growing consumer groups will also play a roll. Lastly, its growth in the organic and natural foods space should matter. And while it's not gaudy, that last one could really drive the business.

While Annie's annual sales is a drop in the bucket to what General Mills already earns, do not underestimate the potential impact of this deal. In retail, it's all about shelf space and Annie's gives it additional shelf space in stores all over the country. Annie's also gives General Mills a greater presence in the more niche, natural foods market. This increased reach should bode well for shareholders.


 

Wade Michels has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.