Summary

Insider trading activity should tell investors that something is really wrong at Kellogg.

Cereal consumption in North America is declining and Kellogg will continue to see stagnant and even negative earnings growth.

Currency headwinds will continue to eat away at the company’s earnings, and an interest rate hike at the Federal Reserve will likely further strengthen the dollar.

Debt obligations are intensifying, which threatens short-term liquidity.

Kellogg is overvalued and is long overdue for a stock plunge.

Kellogg (NYSE:K) could be on the brink of a stock plunge.

Kellogg’s insiders are selling shares at an unprecedented level. The past 6 months, insiders at the company have sold over 60% of their total shares, and institutional holders have unloaded over 138 million shares, which at current prices represent nearly 40% of Kellogg’s market capitalization. However, investors should not be surprised by this sell-off. Kellogg is in a difficult financial position and is highly overvalued for its slow growth – a stock plunge could be long overdue.

Growth Issues in the US

Kellogg faces a revenue growth dilemma in the United States. Consumers are increasingly worried about their health, and as a result, they have begun focusing on eating healthy foods, especially at breakfast time. This has resulted in consumers trying to avoid high carb foods, and as a result, they are moving away from cereal in the morning, a trend that should be troubling to Kellogg’s investors.