We recently compiled a list of 10 Safe Stocks To Invest In For The Long Term in 2024. In this article, we will look at where PepsiCo, Inc. (NASDAQ:PEP) ranks among 10 Safe Stocks To Invest In For The Long Term in 2024.
The Sectors with Promising Growth
The recent market action can be attributed to the Fed’s decision. To discuss the future of the equity market, Drew Pettit, Citi US equity strategist, appeared in an interview on Yahoo Finance on September 26, 2024.
According to Pettit, the market is yet to hit an all-time high if you look beneath the surface. He suggests that the Fed’s decision and if the potential softness in the labor data comes through, investors may regain confidence positioning the market for recovery. He adds that in the past quarter, cyclical and secular stocks have been performing well, but are yet to hit the market peak.
Speaking of growth sectors, some sectors have outperformed others, growing exponentially. Pettit adds that stocks with mature business models have yielded greater returns from minuscule upsides in sales. As for the tech sector, he believes that stocks will remain resilient and will be able to handle some deceleration. He advises investors to remain cautious of tech stocks moving forward and focus on overlooked areas of the market such as consumer goods, financials, and cyclicals.
Investors Must Focus More on Fundamentals
The market saw a great run-up after the easing cycle. However, the question of a soft landing still stands. On September 30, Liz Young Thomas, SoFi head of investment strategy, appeared in an interview on CNBC to discuss the latest market trends and opportunities for investors.
Thomas believes that the maximum gains have already been achieved up until the easing cycle, however, growth may continue till the end of 2024. She stresses that the next 30 to 60 days are extremely crucial for the market and will help investors understand the motive behind the rate cuts, and whether the cuts were needed in the first place.
While growth in the tech sector has been slowing down, other sectors have reportedly grown and more than 80% of the S&P 500 has been trading above the 200-day moving average. She adds that the tech sector has started to strengthen and the optimism surrounding the Chinese economy may combine to yield positive results for the market.
Thomas reiterates that while multiples are rich, to ensure a soft landing, the market must move to trade based on fundamentals rather than on multiples. She explains that this simply means that multiples are unlikely to expand from here, but earnings may get more steady. Sectors such as industrials have been growing and expanding while financials have been slower. Thomas advises investors to focus on stocks that have strong fundamentals and steady earnings growth.
Our Methodology
To come up with the safest stocks to invest in for the long term in 2024 we consulted multiple reports and also screened for reliable growers using the Finviz stock screener. We compiled an initial list of 30 stocks. We then referred to the 10% year revenue growth rate for each of the stocks along with their history of dividend payouts. Companies with the highest growth rates and a history of dividend growth were included in the list. The 10 safe stocks to invest in for the long term in 2024 are in ascending order of their 10-year revenue growth rate.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
PepsiCo, Inc. (NASDAQ:PEP)
10 Year Revenue Growth: 3.30%
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP) is one of the largest food companies in the world. The company is home to some of the most consumed products in the world including Lays, Doritos, Cheetos, Gatorade, Pepsi-Cola, and Mountain Dew.
During the year, the company went through major partnerships and acquisitions in the food industry and improved its stance on technology. Last week, PepsiCo announced the acquisition of Siete Foods for $1.2 billion, complementing the company’s multicultural portfolio with authentic Mexican-American food options. In addition to that, PepsiCo, Inc. (NASDAQ:PEP) partnered with Intuitive AI to launch Oscar Sort AI, a recycling and sortation system that will be deployed at several locations in the United States.
The company has more than 500 brands at its disposal making it one of the safest stocks to invest in for the long term in 2024. It has grown its revenue by 30% between 2020 and 2023. While declining prices across the globe may be a cause of concern, the company’s diversified business and solid growth trajectory minimize the risk attached to macroeconomic changes.
PepsiCo, Inc. (NASDAQ:PEP) plans to advance its productivity initiatives and commercial investments to manage growth. By the fiscal year ending 2024, the company expects to increase organic revenue by 4%, return $8.2 billion to shareholders, and log an 8% increase in earnings per share.
Analysts are bullish on PEP and their 12-month median price target of $185 points to a 10% upside from current levels. By the end of Q1 2024, 62 hedge funds included PepsiCo, Inc. (NASDAQ:PEP) in their portfolios with total stakes amounting to $4.35 billion. Fisher Asset Management emerged as the largest stakeholder, with a position worth $1.21 billion.
Artisan Partners mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q1 2024 investor letter. Here is what the firm said:
“In the demographics/consumer trends theme, slowing sales volumes led us to focus more on services versus goods. As an example, we sold our position in food and beverage leader PepsiCo given slowing growth in its underperforming core beverage business, one which generates about 60% of revenues. Adding to the uncertainty of growth prospects beverages, PepsiCo was forced by local lawmakers and industry wholesalers to shift to a new distribution model during the rollout of Hard Mtn Dew, a new line of drinks that combines Mountain Dew with malt liquor.”
Overall PEP ranks 8th on our list of safe stocks to invest in for the long term in 2024. While we acknowledge the potential of PEP, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.
