Last year’s rising bond yields made many defensive, dividend-paying stocks sell off. That’s because their yields needed to move higher to match rising bond yields. That trend largely peaked last October, but many stocks are still well off their old highs, or still look like a value today.
That’s especially true for food and snack companies. These stocks were also impacted by the early results of new weight-loss drugs and their uncertainty on sales. That fear is now subsiding.
That’s led one analyst to even upgrade
PepsiCo (PEP), the snack and beverage giant.
Shares are still down 13% from their 52-week high, after a steep drop last year.
But investors can buy Pepsi and its industry-leading beverage and snack brands for 20 times earnings, a slight discount to the overall market.
With all the fear of new weight-loss drugs, Pepsi only saw a 0.5% drop in revenues. But overall earnings soared 151% as costs were kept down and as customers stuck around following price increases.
Action to take: Investors looking for a reasonable long-term buy have one now with Pepsi.
The drop in shares has also pushed the dividend to 3.1%. Pepsi has a history of growing that payout over time.
For traders, shares likely have room to keep trending higher and retest their old highs in the months ahead.
The September $190 calls, last going for about $1.85, could see high double-digit returns on a continued trend higher.
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 company mentioned in this article.