The market is exhibiting some mixed action once again in the early going Monday, with small-caps showing some relative strength after lagging on Friday. Breadth is running 3,870 gainers to 2,790 decliners but inconsistency is the theme once again. There are slightly more new 12-month highs than lows but both are at low levels and illustrate the lack of strong momentum.
There continues to be very few attractive technical setups. Stocks are not breaking down but they are not running on breakouts.
One name that I am willing to chase today is Intelsat S.A. (I) , which I've discussed several times. It received a $32 price target today from Jeffries and is breaking to new highs. The stock is somewhat extended by I believe the story is compelling and that it will continue to see good support
Meanwhile, PepsiCo (PEP) is trading at its highest level since January following news that its CEO of the last 12 years, Indra Nooyi, is stepping down. The new CEO, Ramon Laguarta, is a long-time employee of PepsiCo who has filled a number of roles.
The stock traded down on the news initially but is now trading above its recent trading range. It is approaching some technical overhead around the $120 area but right now it is in a group that the market is favoring and seeing some rotation.
While the replacement of long-time CEO may be viewed as a negative, it is not at all unusual for stocks to have a positive reaction to such news. A management change can produce optimism about renewed energy and is often seen as a way to overcome recent obstacles.
PepsiCo has had some struggles dealing with shifting tastes. In its most recent quarter, beverage revenues fell 1% while salty snacks grew 4%. The company expects high-single-digit percentage growth in the years ahead and trades with a trailing P/E of 22. That isn't particularly cheap but the company has grown earnings per share every year since 2012 and that sort of consistency earns a premium.
PEP is a bit of chase here technically, but it has some support in the $116 area. The market likes this sector right now and that is the best thing the stock has going for it.