Down Market, Good Stocks, Southern Company, PepsiCo, Caterpillar

Key Points

• Should investors be looking to utilities for a return beyond dividend yield?
• How Pepsi’s focus on Gatorade and its distribution deal with Celsius is helping the company expand its presence.
• Caterpillar is a large earnings-per-share grower, based on increased infrastructure spending and the Inflation Reduction Act.

Kate’s guest on The MarketBeat Podcast this week is Brian Mulberry, client portfolio manager at Zacks Investment Management. Brian brings three large-cap ideas today and discusses why one utility may have potential beyond the traditional role of a dividend payer. He also discusses why a very familiar beverage and packaged food company is growing beyond its namesake product by focusing on the youth market, and why a maker of heavy machinery appears set for big gains.

 Stick around until the end, because Brian shares how to access Zacks research to get more ideas.

-Why Brian’s utility pick, Southern Company, has earnings durability that causes him to think it can withstand the higher cost of capital as interest rates rise

-The company has strong earnings growth, relative to the S&P 500 and may be able to pass along higher costs to its customers

-Brian attributes the company’s recent blowout quarterly report to investments that the company has made over the years

-Should investors be looking to utilities for a return beyond dividend yield?

-Does a stock like Southern Company make sense in a roaring bull market?

-Why Southern Company happens to be in a good geographical area that’s helping to grow market share and higher revenue lately

-Brian’s second stock, PepsiCo, also has earnings durability

-How the company’s growth through acquisition has allowed it to have pricing power, by focusing on strong brand names

-How Pepsi’s focus on Gatorade and its distribution deal with Celsius is helping the company expand its presence and loyalty in the youth market

-The company has been making investments outside the carbonated beverage market, which is a declining portion of its brand portfolio

-Why Brian sees Pepsi’s distribution strategy as an edge in the supply chain where other manufacturers have fallen short

-Brian’s third stock is an old-school industrial, Caterpillar, which has also navigated supply chains well

-Why Brian sees Caterpillar as large earnings per share grower, based on increased infrastructure spending and the Inflation Reduction Act.

-Why he sees this stock as attractive, although it’s not one he expects to behave like a red-hot growth stock

-Why Brian thinks infrastructure spending will finally ramp up and benefit companies like Caterpillar? 

Stocks mentioned in this episode

 Southern Company (SO)

PepsiCo (PEP)

Caterpillar (CAT)

How to learn more about Zacks Investment Management and find the company’s blogs and research reports:

www.zacksim.com

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