McDonald’s

The fast-food giant continues to revamp both stores and the menu, and it is a solid pick for more conservative investors. McDonald’s Corp. (NYSE: MCD) is the world’s leading global food-service retailer with over 39,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local businesspersons.

The company has built a product pipeline, including a new chicken sandwich, a McPlant line and follow-on celebrity promos. Baird feels the key driver of the McDonald’s story will shift to a technology scale that competitors will struggle to replicate. This tech evolution is supporting a wave of consolidation, while it creates pressure on small and mid-tier players.

In addition, many on Wall Street believe that the company will benefit broadly from economic reopenings in 2021, and the company’s investments in technology, a renewed marketing strategy, loyalty and menu innovation will drive share gains in the industry.

Shareholders receive a 2.22% dividend. KeyCorp Capital Markets analysts have set a $265 price target. The consensus target is $256.68, and McDonald’s stock closed at $232.35 on Wednesday.

PepsiCo

This top consumer staples stock also fits the bill for nervous investors. PepsiCo Inc. (NYSE: PEP) operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips and Fritos corn chips.

The Quaker Foods North America segment provides Quaker oatmeal, grits, rice cakes, natural granola and oat squares, as well as the recently renamed Aunt Jemima mixes and syrups, and Quaker Chewy granola bars, Cap’n Crunch cereal, Life cereal and Rice-A-Roni side dishes.

Pepsi’s North America Beverages segment offers beverage concentrates, fountain syrups and finished goods under the Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Tropicana Pure Premium, Sierra Mist and Mug brands, as well as ready-to-drink tea and coffee, and juices.

Shareholders receive a 2.97% dividend. The Goldman Sachs price target is $160, and the consensus target is $154.78. PepsiCo stock closed on Wednesday at $148.70 a share.

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We are sticking with the sectors likely to do well in a sell-off, as it seems very likely that we could see a 7% to 10% correction in the near term — perhaps even higher. The market is very expensive on a historical basis, and it is only a matter of time before the Federal Reserve announces it will begin tapering its quantitative easing program of buying government debt, which many feel will not go over well.