Latest news with #consumerStaples
Globe and Mail
2 days ago
- Business
- Globe and Mail
The Smartest Growth Stock to Buy With $1,000 Right Now
Quick, think about soda companies. What brand comes to mind? Probably Coca-Cola (NYSE: KO). That makes sense, given that Coca-Cola is one of the largest and best-known consumer staples brands in the world. But is it the smartest growth stock to buy if you have $1,000 to invest right now? Don't hit the buy button until you read about this high-yield alternative. What does Coca-Cola do? From a big-picture perspective, Coca-Cola makes food, even though its products get their own category with the consumer staples space. Beverages are still a life necessity, even if its eponymous product is more for pleasure than need. The company is an industry powerhouse. Not only is Coke one of the best known, and most beloved, beverage brands, but Coca-Cola happens to have a massive distribution network, impressive marketing skills, and powerful research and development chops. The company's scale, meanwhile, gives it the wherewithal to act as an industry consolidator, buying up smaller brands and beverage concepts to round out its product portfolio. That, in turn, helps to keep Coca-Cola's brands relevant with consumers. The company's business is so strong that it has been a longtime holding of Warren Buffett within Berkshire Hathaway 's stock portfolio. If Buffett has put billions into Coca-Cola, why shouldn't you put in $1,000? There's one notable reason: Investors have fully priced Coca-Cola's shares. The stock's price-to-sales ratio and its price-to-earnings ratio are both above their five-year averages, and the dividend yield is near 10-year lows. The business is doing relatively well right now, but virtually everyone seems to know it. There's another option in the beverage space One of the other factors that sets Coca-Cola apart is its status as a Dividend King. But it isn't the only Dividend King beverage company. Direct competitor PepsiCo (NASDAQ: PEP) has increased its dividend annually for 53 years and counting. Meanwhile, PepsiCo's price-to-sales and price-to-earnings ratios are below their five-year averages, and its yield is toward the high end of its historical range. So, unlike Coca-Cola, PepsiCo looks cheap. PepsiCo stands out on the valuation front, but it also stands out on the diversification front. Like Coca-Cola, it has a globally diversified business. But PepsiCo operates in the salty snack and packaged foods spaces, too. That gives it more levers to pull to support long-term growth and more businesses to lean on when one of its divisions is facing difficulty. And make no mistake, every company, no matter how good, eventually faces hard times. The best companies, which include Dividend Kings, are the ones that successfully manage through the hard times. While Coca-Cola is performing quite well today, PepsiCo isn't. That's why its yield is a historically high 4.3% and its stock price has lost a third of its value since early 2023. But PepsiCo isn't giving up. In fact, it is leaning on its successful playbook and buying smaller brands (Siete and Poppi) that are more relevant with consumers right now. That should, in time, help PepsiCo to get back on the growth track. PepsiCo could be the contrarian play you've been looking for If you're looking at Coca-Cola today, you should probably give PepsiCo a closer look. But don't just think about how each business is performing this very second. Think about their valuations in relation to their performance and, just as important, what each company is doing to ensure they succeed. They both have solid businesses and are working on a bright future, but PepsiCo isn't getting any credit for it because it is facing some near-term headwinds. If you can think long term, putting $1,000 into PepsiCo today could end up being a huge win for your future wealth. Note that one of the keys to Buffett's investment approach is buying good companies when they look attractively priced. Between Coca-Cola and PepsiCo, it is PepsiCo that passes that simple screen. Should you invest $1,000 in Coca-Cola right now? Before you buy stock in Coca-Cola, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $660,341!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $874,192!* Now, it's worth noting Stock Advisor 's total average return is999% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Yahoo
01-06-2025
- Business
- Yahoo
1 Magnificent S&P 500 Dividend Stock Down 23% to Buy and Hold Forever
PepsiCo has popular beverage and food brands. Higher prices have hurt short-term results. The board of directors remains committed to raising dividends. 10 stocks we like better than PepsiCo › Equity markets have been volatile this year. Uncertain tariff policies and the impact on the global economy have certainly played a role. During these unsettled times, turning to a dividend-paying stock that has experienced a large price drop can prove a wise investment, providing the company's long-term fundamentals remain sound. Fortunately, PepsiCo (NASDAQ: PEP), although its share price has fallen nearly 23% over the last year through May 30, fits the bill nicely. It's time to look closely at what makes this consumer staples company a buying opportunity for long-term dividend-seeking investors. Most people know about the company's Pepsi soda brand. However, PepsiCo has a host of brands across beverage and food categories that consumers recognize and buy. PepsiCo's beverages include Gatorade, Mountain Dew, and Ocean Spray. It also sells food like cereal, granola bars, oatmeal, and a host of snacks under brands like Life, Quaker, and Doritos. Unfortunately, even PepsiCo's products aren't immune from consumers fatigued by higher prices. Its first-quarter adjusted revenue, which removes foreign-currency translation effects and the impact of acquisitions and divestitures, grew a tepid 1%. This was entirely due to higher prices, which added 3 percentage points. Meanwhile, volume subtracted 2 percentage points. Since the company sells its products globally, the impact of tariffs remains unclear. However, it could raise costs and force management to raise prices. This could further dampen demand and hurt profitability. Management currently expects this year's adjusted earnings per share to come in roughly flat versus 2024. Previously, it called for a mid-single-digit percentage increase. However, given the company's breadth of offerings, I'm not concerned about long-term demand when tariff policies become more stable. In the meantime, PepsiCo's shareholders can collect reliable dividends. In fact, the board of directors raised the June quarter's payout by 5%. That marked 53 straight years with an increase, making the company a Dividend King. At the new $5.69 per-share annual rate, shareholders can sit back and collect the 4.3% dividend yield. That's more than triple the S&P 500 index's 1.3% yield. It's typically a positive sign when companies raise dividends, particularly given that they're loath to cut payouts. However, it's still useful to check for yourself. And PepsiCo meets the test with a 78% payout ratio. Of course, PepsiCo's dividends could get cut if its products see a long-term decline in demand. However, with its stable of well-known products, I don't see that happening. Consumers have been hit with higher prices before, and more may come down the pike. These are short-term effects, but demand should rebound once the larger economic headwinds calm down. After all, people will still buy soda, Gatorade, and chips, and PepsiCo has a plethora of popular offerings. Meanwhile, the stock's valuation has become more attractive. The shares trade at a price-to-earnings (P/E) ratio of 19, down from 26 a year ago. It's also cheaper than the S&P 500's average P/E multiple of 28. You can sit back and collect dividends while waiting for higher demand for PepsiCo's products to return. Once it does, earnings growth will accelerate, and the stock likely will receive a higher valuation. That should result in an attractive total return for PepsiCo's shareholders who can see the big picture while the company suffers through some short-term earnings pain. Before you buy stock in PepsiCo, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and PepsiCo wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 1 Magnificent S&P 500 Dividend Stock Down 23% to Buy and Hold Forever was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11-05-2025
- Business
- Yahoo
Dollar General Is Up Big, Is There More Room to Run?
Dollar General has rallied strongly in 2025 even as the market fell into correction territory. The company can benefit from economic weakness based on its low price points. The stock is still far off its 2022 highs. 10 stocks we like better than Dollar General › Moods can switch quickly on mercurial Wall Street. For example, Dollar General (NYSE: DG) has rallied strongly in 2025 even as the S&P 500 index was falling into correction territory and the Nasdaq Composite into a bear market. Dollar General's retail business model might have something to do with that, but there's more to the story here, and it is important to understand investor expectations around this low-price retailer before you buy it. Roughly 80% of Dollar General's top line is from the category it calls consumables. This group includes consumer staples like cleaning supplies, food, and personal hygiene items. These are necessities that are purchased regularly regardless of the economy. This is important to keep in mind as you consider the company's situation today. The next big piece of the puzzle here is that Dollar General is a low-price retailer, so it sells mostly consumer staples, mostly at low prices. Only there's a caveat here. Sometimes the low price is possible because the package size is small. A multipack of toilet paper bought from a big box retailer like Walmart might actually be more attractively priced on a per-roll basis than a single roll at Dollar General. But the single roll is still notably less expensive than the multipack. And the final part of the story is that Dollar General's stores are generally small and located close to the populations it is meant to serve. A consumer could go to a Walmart store, but it might be a 30-minute drive. A Dollar General store just a couple minutes away will be far easier to get to and will require much less time to get the shopping done. That's particularly true if the customer just needs a few items. So, all in, Dollar General is largely selling necessities at low prices in conveniently located stores. This is a compelling proposition for lower-income consumers and even for more-affluent buyers during economic uncertainty. That background helps explain why the stock has rallied in 2025 even as the S&P 500 and the Nasdaq Composite have struggled. Market uncertainty has been driven by geopolitical concerns, tariffs changes, and a general fear that a recession could be on the way. Essentially, investors are looking for a safe haven. What's interesting about the stock's rally, however, is that Dollar General is still down by around 65% from its 2022 highs even after the strong 2025 performance. So there's another layer to consider when it comes to the rally, and that is investor expectations. Simply put, investors aren't expecting much from Dollar General right now. So even modest improvements in its financial results are likely to be well received. Notice that the stock-price decline here was accompanied by an earnings decline even though revenue has remained fairly resilient. The company's margins are the issue, not its core model. Fixing profit margins can take a little while, since it usually requires a mixture of cutting costs and raising prices. For a low-price retailer, this can be a nuanced effort. In 2025, a key goal is to close underperforming stores (including a new store concept that didn't work out as well as hoped), updating existing stores, and opening new ones. Management is currently projecting earnings to fall between $5.10 and $5.80 per share. It earned $5.11 in 2024, so this range suggests the company has hit bottom, and the next move is for earnings to rise. If earnings do start to head higher, investors will probably continue to reward Dollar General with a higher valuation. The simple answer is yes, given the still huge price decline from 2022 levels. The strong early-year showing in 2025 is more a function of market dynamics than anything Dollar General has actually achieved. If it starts to show that its business has turned for the better, the still-negative mood among investors will probably keep changing for the better, too. Before you buy stock in Dollar General, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Dollar General wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $617,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $719,371!* Now, it's worth noting Stock Advisor's total average return is 909% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy. Dollar General Is Up Big, Is There More Room to Run? was originally published by The Motley Fool Sign in to access your portfolio
