Betting on a Bounce in a Big Blue Chip

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

With small-cap stocks soaring ahead in the post-election period, many Alpha Algorithm strategies are looking to buy well-established blue chips lagging in the sharp rally. That is the case with this week’s Alpha Algorithm recommendation, PepsiCo Inc. (PEP).

Founded in 1898 and headquartered in Purchase, New York, PepsiCo, Inc. operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos, and Santitas tortilla chips; and Cheetos cheese-flavored snacks, and Fritos corn chips. Its Quaker Foods segment provides Quaker oatmeal, Aunt Jemima mixes and syrups, Cap’n Crunch cereal, Life cereal and Rice-A-Roni side dishes. The company’s Beverages segment offers Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain Dew and Tropicana Pure Premium.

PEP

PEP vs. the S&P 500 over one year

Eight Top Investment Strategies Betting on PepsiCo Inc. (PEP)

  1. High Quality Stock

The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.

  1. Fundamental Strength

This is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.

  1. Dividend Aristocrat

The stock is among those that have increased dividends for at least 25 consecutive years.

  1. Capital Strength

The stock is part of a strategy that seeks to outperform the market by selecting companies based on the strength of their balance sheets, long-term debt ratios and return on assets (ROA).

  1. Insider and Analyst Sentiment

One of 100 top stocks out of 5,000 U.S. stocks where corporate insiders (a director or senior officer of a company, or any person or entity that owns more than 10% of the company’s stock) are buying the stock and Wall Street analysts have recently increased earnings estimates.

  1. Low Interest Rate Sensitivity

This is a large-cap U.S. stock selected for its low volatility and positive price performance in a rising-interest-rate environment.

  1. Goldman Sachs’ Active Beta

The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.

  1. Value Tilt

Selected using a multi-factor modeling approach, the stock is a value stock designed to enhance portfolio risk/return characteristics.

Exclusive  Warning, Your Answer May Sanction Tyranny

Recommendation

Buy PepsiCo Inc. (PEP) at market today and place your stop at $95.00. If you want to play the options, I recommend the January $100 calls (PEP170120C00100000), which last traded at $3.67 and expire on January 20, 2017.

Portfolio Update

Raise your stop in Northrop Grumman (NOC) to $243.60 to lock in at least a 15% gain in this position.

Sincerely,

Nicholas Vardy

Nicholas A. Vardy

share on:

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
share on:

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader
LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader
LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener
LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program
LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader
LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor
LEARN MORE HERE