This Boring Blue Chip Is About to Reverse Course

It's one of the simplest ways to invest. But it works...

Buy boring companies.

Sure, the high-flying stocks are exciting. They make for interesting conversations with friends. But they're risky. And when they don't work out, it can be a bloodbath.

Instead of chasing highfliers, you can do incredibly well simply by focusing on boring, steady businesses. That's especially true if you buy one of these blue chips after a crash.

Investors have that chance today. One blue-chip stock has fallen more than 50% over the past three years. And it recently triggered a rare setup.

According to history, that means it's poised for a reversal... And double-digit upside is likely over the next year.

Investors Want Nothing to Do With General Mills

When I say this stock is boring, I mean it. I'm talking about General Mills (GIS)...

General Mills owns more than 100 brands, including Cheerios, Betty Crocker, and Pillsbury. If you check any grocery store, you'll find dozens of General Mills products on the shelves.

It's a food company – about as far from exciting as you can get. And these days, investors want nothing to do with it.

In recent years, General Mills' stock has taken a beating due to weak sales and margins. And a new flurry of selling kicked off this month. The company reported yet another disappointing quarter... just as war-driven inflation fears are rising.

Shares of General Mills plunged more than 20% in recent weeks. And that pushed the stock to an extreme based on the relative strength index ("RSI").

The RSI looks at recent price action and tells us whether a move has gone too far, too fast in either direction. An RSI below 30 triggers an oversold extreme, which means a bounce higher is likely.

But General Mills is even more hated than that... It hit an RSI below 20 in the latest sell-off. Take a look...

General Mills has endured a brutal few years. And that pain has only intensified.

The RSI rarely dips below 20 for this stock. These setups have only happened nine other times since 1980. But it turns out, they were fantastic times to buy. Take a look...

General Mills may be a boring stock... But it has been an incredible long-term compounder. It has grown 7.5% a year since 1980. And if you include dividends, that annual return jumps to more than 10%.

Even with those steady gains, though, you can do better if you buy after the RSI falls below 20.

These situations led to gains of 2.1% in three months, 8.1% in six months, and 13.4% over a year. That's nearly double the typical buy-and-hold return. And the stock was higher a year later 89% of the time.

Obviously, General Mills still has its struggles. And this signal doesn't mean prices can't fall further from here.

But according to history, the worst is likely behind us. So if you're looking to add a blue chip to your portfolio, General Mills is worth considering right now.

Good investing,

Brett Eversole