Stocks move on a rollercoaster up, down, sideways, but they never stop.
Our job is to identify when stocks are swooning and about to reach levels of a bottom, and then scoop the shares and wait for the up move to occur. Sounds simple, right? It's really not that easy, but rather than take a top-down view and just simply buy any stock after a correction, we at the Action Alerts PLUS investing club tend to take a bottoms' up approach. That is, we select stocks within sectors that have quality fundamentals and technicals. Pepsi ( PEP) is one of those names. We added this beverage company to the portfolio last summer and it ran up to new highs, but now it is in the middle of a correction that has brought the stock near lows in October. Peaks and valleys.
Let's check the chart, which can be viewed in more detail, here.
After this modest correction though, we see some opportunity to add shares following a 15% pullback. No doubt the stock has been a disappointment in 2023, falling about 5% while the stock market was up 5% in January. However, a high quality name like Pepsi does not often give you a chance to buy at a discount. This time, however, we see that opportunity. The current indicators are very oversold, and with earnings out later in the week that could be a nice catalyst to get energy into Pepsi, once again rising toward that $200 area.
For the portfolio, we have a good-sized position at 3.75% and rate this a "Three" (holding pattern), but we would suggest adding more of these shares if you have some capital to spend.