As 2025 draws to a close, a unique opportunity emerges for investors seeking value beyond the high-flying growth stocks. This article delves into five companies—PepsiCo, Coca-Cola, Energy Transfer, Vertex Pharmaceuticals, and The Trade Desk—which have seen their share prices lag behind the S&P 500 this year. Despite their recent underperformance, these businesses present compelling cases for long-term investment, offering a blend of strong dividends, attractive valuations, and significant growth prospects. From consumer staples giants with reliable payouts to an innovative pharmaceutical firm and a resilient adtech leader, these selections cater to various investment strategies, promising robust returns for those willing to look beyond short-term market trends.
Many investors are currently seeking out growth-oriented stocks, especially with major market indices reaching unprecedented levels and a handful of companies largely driving the S&P 500's performance. However, there are still numerous valuable opportunities for those who know where to search. Several companies, with their stock prices having dropped significantly from their 52-week peaks, are now available at appealing valuations. This article focuses on five such enterprises, explaining why they are considered prime investment choices for October. These include PepsiCo, Coca-Cola, Energy Transfer, Vertex Pharmaceuticals, and The Trade Desk, all identified by Fool.com contributors as top picks worth considering for long-term portfolios.
Demitri Kalogeropoulos emphasizes PepsiCo as an attractive option, particularly for its robust dividend, especially as many technology stocks hit new highs. PepsiCo, a leader in snacks and beverages, offers an appealing value despite facing challenges such as soft demand and rising costs. While organic sales growth was modest at 2% in the first half of 2025, and core earnings saw a 3% decline, the company projects an $8 billion return in dividends for 2025, alongside $1 billion in stock repurchases. This highlights a cash-rich operation with substantial capacity for future dividend increases. With a current dividend yield over 4% and a history of 52 consecutive years of dividend hikes, PepsiCo stands out as a reliable choice for income-focused investors during periods of market uncertainty.
Daniel Foelber champions Coca-Cola, echoing the sentiment for dividend-focused investors. As a fellow Dividend King, Coca-Cola has a remarkable track record, having increased its payout for 63 consecutive years, offering a current yield of 3.1%. Despite facing similar economic pressures as PepsiCo, such as inflation impacting consumer spending, Coca-Cola has maintained solid organic growth by adapting to consumer preferences, including offering low-sugar options. The company forecasts 5% to 6% organic revenue growth for 2025, demonstrating resilience. Currently, Coca-Cola trades at a notable discount relative to its historical price-to-earnings ratio, and its yield exceeding 3% typically signals an attractive valuation. For risk-averse investors, Coca-Cola represents a steadfast income producer with a sound business model and compelling valuation.
Neha Chamaria highlights Energy Transfer as a compelling investment in the often-volatile oil and gas sector. Despite the industry's inherent fluctuations, Energy Transfer provides crucial, stable services vital to the economy. The company plans to invest $5 billion in growth this year and aims for 3% to 5% annual dividend growth over the long term. With shares down approximately 11% in 2025, it presents a buying opportunity. Energy Transfer's extensive pipeline network, spanning over 140,000 miles, processes and transports a significant portion of U.S. natural gas. The company is actively pursuing major expansion projects, especially in the Permian Basin, and holds a 34% stake in Sunoco, further solidifying its market position. These growth initiatives are expected to boost revenue and cash flow, supporting its generous 7.6% dividend yield and generating substantial long-term returns, though investors should be aware of its master limited partnership structure and associated tax forms.
Keith Speights expresses confidence in Vertex Pharmaceuticals, particularly for its strong downside protection and significant upside potential amidst concerns about a potentially overvalued market. Vertex Pharmaceuticals exclusively offers approved therapies for cystic fibrosis (CF), ensuring consistent demand regardless of market corrections. The company's newest CF treatment, Alyftrek, provides more convenient once-daily dosing and promises higher profits due to lower royalty burdens. Speights is especially optimistic about Journavx, Vertex's new non-opioid pain medication, which is experiencing a strong initial launch. The company's pipeline also includes promising late-stage programs, such as zimislecel for severe type 1 diabetes and povetacicept for IgA nephropathy, with inaxaplin having the potential to treat APOL1-mediated kidney disease, which affects a patient population larger than that of CF globally.
Anders Bylund recommends The Trade Desk, acknowledging its current struggles but seeing a valuable opportunity. The digital advertising titan has experienced a downturn, partially due to the lingering effects of the 2022 inflation panic, which led to reduced ad spending, and concerns over its high fees. Additionally, ongoing trade disputes have created economic uncertainty, further impacting ad budgets. However, The Trade Desk is achieving significant successes, particularly with its Unified ID 2.0 (UID2) technology, which is emerging as a critical replacement for third-party tracking cookies across various advertising platforms. Despite its current valuation ratios appearing high (57 times trailing earnings and 8.6 times sales), the stock is down 60% year-to-date and even more from its December peak, offering a substantial discount. The company's consistent performance in both booming and challenging market conditions instills confidence that this current dip is a temporary setback, making it a compelling buy now.
Considering these diverse opportunities, investors have a clear path to diversify their portfolios with robust companies offering stability and promising growth narratives. From the consistent dividends of consumer staples giants to the innovative strides in pharmaceuticals and the strategic positioning of an adtech leader, these selections provide compelling reasons for optimism. By focusing on long-term fundamentals and strategic market positioning, investors can leverage these currently underperforming assets to build resilient and rewarding portfolios, navigating market volatility with confidence and foresight.
