While the market has had a strong start to the year, stocks are turning down again. That’s not a problem for investors who focus on value. That includes companies with strong brands, as well as on companies that can offer steady and growing dividend payouts.
These companies may not always be big winners, but they tend to hold their own in down markets. And that can lead to winning performance over time.
That’s particularly true for companies that can pass on higher costs to consumers. One winner is General Mills (GIS). The food producer just raised its forecasts for its fiscal year, expecting earnings to rise by 7 to 8 percent, up from 4 to 6 percent in December.
The owner of brands such as Betty Croker and Nature Valley is already up 14 percent in the past year, even as the rest of the market has taken a hit. Yet shares are still well priced at 18 times forward earnings.
Action to take: Long term investors may like shares at current prices or on a pullback. The stock yields about 2.8 percent here, and the dividend was just raised.
For traders, the July $85 calls, last going for about $2.50, play to the stock’s long-term uptrend. The option can likely deliver mid-double-digit gains in the coming months before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.