This Consumer Brand Is Priced for a Growth Move Ahead

Consumers tend to find companies they like, and then stick with them. That allows successful consumer companies to build an ecosystem of products, including those that need to be upgraded every few years.

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  • Investors who target these companies in a market downturn can fare well thanks to lower prices. And they can also get in ahead of a new piece of consumer tech, which may give shares a quick lift higher.

    One consumer tech leader is Sony Group (SONY). The electronics conglomerate has a number of high-margin items. The most promising for more revenue in the next year is its PlayStation VR2 headset.

    The company expects to have two million units in March of next year – just as supply chain issues resolve for distribution of the PlayStation 5 console.

    That could be a boon for shares, which are down 40 percent in the past year.

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  • Action to take: Shares are priced at 13 times earnings, an inexpensive valuation for one of the global leaders in consumer brands. Shares also pay a 0.8 percent dividend yield at current prices.

    For traders, the January $80 calls are well priced at about $1.05. They could see high double-digit growth on a move higher in the share price in the coming months. And the strike price is right at the 50-day moving average, about where shares would rally on a strong bounce.


    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 of the companies mentioned in this article.


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