In this article, we discuss 5 best counter cyclical stocks to buy now. If you want to see more stocks in this selection, check out 11 Best Counter Cyclical Stocks To Buy Now.
5. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 70
PepsiCo, Inc. (NASDAQ:PEP) is one of the best counter cyclical stocks to invest in. On February 1, PepsiCo, Inc. (NASDAQ:PEP) declared a quarterly dividend of $1.15 per share, in line with previous. The dividend is payable on March 31, to shareholders of record on March 3. The company has 51 consecutive years of dividend increases under its belt.
On March 20, Deutsche Bank analyst Steve Powers raised the firm’s price target on PepsiCo, Inc. (NASDAQ:PEP) to $188 from $186 and maintained a Hold rating on the shares. The analyst noted that there is a growing possibility of economic challenges for the consumer staples industry, which has increased the firm’s apprehension regarding the potential risks to the company’s future performance across much of its coverage.
According to Insider Monkey’s fourth quarter database, 70 hedge funds were long PepsiCo, Inc. (NASDAQ:PEP), compared to 72 funds in the earlier quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 6.65 million shares worth $1.20 billion.
Here is what Lindsell Train has to say about PepsiCo, Inc. (NYSE:PEP) in its Q3 2022 investor letter:
“At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindycompatible anti-ageing properties. Consider that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.
With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualized rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…” (Click here to see the full text)
