Earnings season is underway. And investors are finding reasons to be both bullish and bearish right now. For companies that are beating earnings handily, the market is generally rewarding those companies, especially if they also show the ability to raise their guidance.
That includes tech and non-tech stocks alike. With some of the rising uncertainty the market, including uncertainty over AI investments and trades, investors may find better returns with more defensive companies beating earnings now.
One such play is food giant Tyson (TSN). The company just reported fantastic results and strong margins, thanks to the strength of chicken demand and prices right now.
Tyson shares have now traded flat over the past 12 months, amid concerns of slowing consumer spending following a rise in food prices. Growth has been lackluster until the most recent quarter, but that’s kept shares reasonably valued at 16 times forward earnings.
Action to take: With improving margins in the chicken business, Tyson shares could be a relative outperformer this year as other segments of the market take a break. Investors may like shares here, with an eye towards buying more on any big stock market drops.
At current prices, Tyson also pays a solid 3.5% dividend.
For traders, shares may start to see some traction higher. The June $65 calls have become highly active. Trading at about $0.65, the trade could see high double-digit returns or better in the coming months on a rally in Tyson shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.