What's the matter with PepsiCo (PEP) ? How could they have screwed up so badly? What's with Boeing (BA) ? I thought they had such terrific numbers and a great order book. Didn't Procter & Gamble (PG) report an upside surprise? How could that sell off so badly? Didn't Texas Instruments (TXN) deliver much-better-than-expected numbers? What the heck's going on there?
The answer is nothing's really wrong with any of these except that the stocks simply got ahead of themselves because of events that made people so excited they bid them up beyond where the stocks can be sustained at this very moment.
You have probably heard me say a gazillion times that I would buy this or that stock on a pullback. It's become part of my gospel because I so often want to highlight the best-of-breed stocks and get you in them, but get you in them at better prices.
All four of these are giving you better prices than you had before today and they are doing so because of technical reasons, and technical reasons only.
Let's start with PepsiCo. What kind of quarter did it give you? It gave you exactly what we have come to expect from PepsiCo, a dependable set of numbers with good execution and a lot more organic growth than Coca-Cola (KO) . So why didn't it go up? Because it ran from $102 in February to $114 going into the quarter. That's one of the best moves of all packaged-goods stocks, and PepsiCo isn't going to be rewarded for doing its usual great stuff. (PepsiCo is part of TheStreet's Action Alerts PLUS portfolio.)
So you get this pullback, the kind of pullback that lasts for a couple of days and then you buy.
Boeing shocked people in the previous quarter, delivering much better cash flow and a phenomenal set of order wins while at the same time beginning to reap the hard-earned gains from the Dreamliner. But this stock has been nonstop since the election, traveling from $139 to $184, with the first part being based on a surprise Trump victory and the second being the better-than-expected quarter.
What did you get this time? Again, fantastic cash flow, more gains from the Dreamliner and a continually positive outlook. Even though the numbers were terrific, it wasn't enough. I don't know if anything could have been enough after this move.
I wasn't enamored of Procter's number even though it was a nominal beat. The company only reported 1% organic growth and it is still in sluggish mode. But here's one where the stock had been languishing in the $80s until we heard that Trian Partners, led by the outstanding investor Nelson Peltz, had taken a $3.5 billion position in February. That news sent the stock to $91 where it held until this quarter. I need to be sure you understand that this was exactly the quarter I expected. But Peltz is the only engaged investor for whom it has paid to get in after he announced a position.
So this is your chance to piggyback on his yet-to-be-announced plan. It's a gift to get in here.
Finally, there is Texas Instruments, which has become one of the most reliable semiconductor manufacturers in the land. It's been on an incredible run from $67 since the election to $82 before it reported. What did it do? Another magnificent quarter, that's all, nothing more, nothing less. Again, it had to do far more than magnificent, it had to do what Caterpillar (CAT) or McDonald's (MCD) or DuPont (DD) did, some number that seemed insanely better, almost alchemy. It didn't. It's consistent, and consistency means no surprises, just solid numbers.
We all want CATs and Mickey D's and Double D's in our portfolios. But we also want reliable, consistent companies that allow us to sleep at night and we want to buy them at our prices. When we get them, as we are doing now, we can't ask, "What's wrong?" We have to say, "This is our chance." And that's exactly what these are.