In a bull market, investors want what’s going up. But fast-moving stocks can also quickly move down in a bear market. However, companies that have built strong brands tend to mostly just go up over time, even if the gains are more slow-and-steady.
That’s why investors should consider strong brands as part of their portfolios. Especially when companies with strong brands are able to beat on earnings and raise estimates in uncertain times.
For instance, PepsiCo (PEP) is best known for its beverages. But it’s also a big player in the snack industry. Potato chips in particular have helped Pepsi report strong earnings. Revenues for the company rose 10 percent over the last year.
While Pepsi is priced a bit more expensive than the overall market at 25 times earnings, its portfolio of strong brands should allow it to continue to profit over time.
Action to take: Pepsi is a dividend payer, with a current yield of 2.8 percent. Over the long term, shares tend to deliver steady returns, making this company a worthwhile buy now, and on any market pullback.
For traders, shares are likely to continue their uptrend in the short-term following their earnings beat. The September $190 calls, last going for about $3.00, can likely see mid-double-digit gains in the coming months.
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.