Among the biggest losers in Wednesday’s early trading are Acuity Brands (NYSE: AYI), American Greeting (NYSE: AM) and General Mills (NYSE: GIS).

Another Victim of the Slow Construction Market

Shares of Acuity Brands (NYSE: AYI) are slumping -10% after the builder of lighting fixtures for commercial and residential construction markets missed estimates. This has become a recurring theme for many companies tied to the moribund construction industry, and is unlikely to change for at least several more quarters — if not longer.

But a case can be made that lighting-related stocks will eventually fare better than other firms catering to commercial and residential construction. That’s because significant advances have been made in terms of lighting efficiency, and upgrading lighting is one of the fastest and lowest-cost ways to save energy.

Action to Take –> Nevertheless, shares may fall further in the near-term before eventually rebounding over the long haul. Analysts’ expectations that earnings per share will rebound roughly 30% next year appear to be far too optimistic. This stock becomes a buy when 2011 EPS forecasts, which stand at $2.78, drop below $2.50 a share.

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Impressive Cost Cuts save the Day for American Greetings

American Greetings (NYSE: AM), a leading supplier of greetings cards, is slumping -5% on Wednesday after trailing analysts’ profit forecasts. Funny thing is, profits were still extremely impressive, coming in at $0.75 per share, $0.04 below estimates. The company took so many costs out of its business that profits tripled even as sales fell about -5% from a year ago. Part of the earnings strength comes from a decision to sell its money-losing set of retail stores.

#-ad_banner-#Now, management needs to come up with a better plan to turn around a revenue slump that has been underway for quite some time. Annual sales have been flat to down for nearly a decade, and are now -15% lower than in 2002. Heavy competition and a completely mature market have created powerful headwinds.

To boost sales, the company has acquired Chicago-based Recycled Paper Greetings, which brings in $75 million in annual revenue with its humorous greeting cards. American Greetings also acquired the Papyrus line of greeting cards.

Action to Take –> This is a very cheap stock, trading for around six times next year’s profits. Unless management looks to do more deals, it can sharply boost its dividend, now that cash flow is so much more robust. The dividend currently yields 2.8% after today’s sell-off. American Greeting could triple its dividend and still have a payout ratio below 50%. Investors should value this stock more for its cash flow than growth, but on that score, it does look quite impressive.

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General Mills’ Profit Squeeze

What happens when your costs are rising but your biggest customer forbids you from increasing prices? Profits get squeezed. That’s the quick story for General Mills (NYSE: GIS), which has to deal with higher prices for dairy products and other items that go into its various lines of yogurts, cereal, and other foods. But Wal-Mart (NYSE: WMT), which has its own agenda of price freezes or rollbacks, won’t let General Mills pass through the costs. As a result, gross margins fell a whopping -600 basis points, and operating profits dropped -40% from a year ago. That led the company to announce a modest profit shortfall Tuesday evening, pushing shares down -4% this morning.

Action to Take –> This is just another example of how difficult life has become for the major grocery chains and the leading branded food suppliers. What is good for Wal-Mart and consumers is bad news for these firms. General Mills will hold a full-day conference with analysts Thursday, at which point the company may announce new revenue-boosting initiatives. But for now, shares look like dead money.