Kellogg (NYSE: K), known for its popular breakfast cereals, had a profitable quarter despite the ongoing recession. Though it achieved this profitability through "operational discipline," or cost-cutting and careful watching of expenditures, the company showed the ability to continue to squeeze out profits in bad times. With the end of the recession looking within reach, though perhaps not yet fully visible, Kellogg looks to be well-positioned to take advantage of potentially better times.

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Revenues Off, Profits Up
Kellogg's recent quarter saw revenue fall by 3% to $3.23 billion from $3.34 billion the same quarter last year, while earnings jumped to 92 cents per share from 82 cents. The international market was softer than the domestic market with sales off 13%, but Kellogg continues to be a strong player worldwide. The company sees 8% to 10% growth going forward, with earnings in the $3.23 to $3.29 range for 2009, excluding an expected 26-cent charge for cost-cutting. With Kellogg expecting $1 billion in savings by 2011 from its cost-cutting plan, things are looking good for the cereal maker.

It's Not Just Kellogg
General Mills (NYSE: GIS) has been posting healthy profits and, along with Kellogg, has raised its dividend. Though a cereal maker, General Mills is more widely diversified than Kellogg. So while General Mills is considering changing the ingredients in its iconic Wheaties cereal, even if this development turns out to be a dud like "new Coke" was years ago, the company should still have a hefty arsenal of popular products.

Ralcorp (NYSE: RAH), the jazzy acronym for the company that makes Post cereals and other food products, is another cereal and snack maker that is doing well. Further, Ralcorp has a nearly invisible recession wrinkle for success, as it manufactures many of the private label products that have captured frugal consumers' dollars. This, along with its staple products, should keep Ralcorp on track as we slowly emerge from the recession.

Other food giants, such as Kraft (NYSE: KFT), which features a predominance of snack and prepared foods, have found the recession manageable at worst and surprisingly amenable at best. The recent lowering of commodity prices, always an area of interest to food makers, has been good to Kraft and ConAgra (NYSE: CAG), another diversified food giant. Kraft and ConAgra, while not directly in the cereal business like the other three companies, still battle for shelf space in stores and consumer cupboards in homes. Both companies continue to thrive with strong brand name goods.

Some will maintain that the food business is a relative given in a recession, yet these companies have all continued to be well-managed and found ways to assertively market and continue developing. It's clear that Kellogg and the others haven't taken the consumer for granted, even during these economic down times.

Poised For The Upside
Kellogg and these other companies should emerge from the recession ready to roar with their seemingly mundane, even boring, but highly popular products such as Frosted Flakes, Cheez-its and General Mills' Cheerios still in demand. As a result, they are poised for continuing profitability and growth. Cereal and other food makers are not often thought of as growth stocks, sometimes due to difficult margins and a seemingly blunted upside. But as price increases dovetail with lower commodity prices, along with the global push these companies continue to make, Kellogg and the others may deliver that sweet one-two punch - growth and value along with very little risk. Or maybe that's a one-two-three punch.

Bottom Line
Watch the stock prices on Kellogg and the other food companies mentioned above, and you can pick up a good dividend-payer that may be part of a future growth-value stock renaissance. (For more, check out A Guide To Consumer Staples.)

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