It is natural to feel worried about the economy. Benchmark interest rates have been boosted back to a zone last seen before the Great Recession, and inflation, while cooler than it was last year, is still higher than normal.
These and a host of other macroeconomic headwinds have weighed on market sentiment as pundits and experts attempt to predict how interest rates will move from here and whether the economy will tip into a recession next year. Investors can't be blamed for feeling anxious about their portfolios in such a climate.
However, the truth is that you need not worry too much about what the market is doing if you fill your portfolio with solid, well-managed businesses. Such stocks can often help you weather almost any type of economic situation thanks to a recognizable brand with superior products and/or services, and a competent management team that can chart further growth for the business.
Here are three companies that you can consider adding to your portfolio without caring about how the stock market is performing.
Mondelez International(NASDAQ: MDLZ) is a market leader in the snack foods industry with recognizable brands such as Oreo, Toblerone, Ritz, Cadbury, and Milka. The business reported steadily rising revenue through the pandemic, from $26.6 billion in 2020 to $31.5 billion in 2022. Net income increased from $2.6 billion to $2.7 billion over the same period (after adjusting for one-time items). The snack foods specialist generated an average positive free cash flow of $3.1 billion for these three years, demonstrating the cash-generative nature of its business model along with the strength of its product lines.
Mondelez's earnings momentum has carried on into 2023. For the first nine months of the year, its revenue climbed 17.1% year over year to $26.7 billion, while operating income surged 59.6% to $4.3 billion. Net income (after adjusting for a gain on marketable securities) soared 59.5% to $3.4 billion.
The company's strong free cash flow generation continued as well, with $2.4 billion produced in those three quarters -- up 25% year over year. Those robust results led management in July to boost the company's quarterly dividend by 10% to $0.425 per share. Mondelez also raised its 2023 organic revenue growth outlook to a range of 14% to 15% versus just 12% earlier, with earnings per share expected to grow by around 16% instead of just 12%.
Just last month, Mondelez rolled out a new campaign positioning Toblerone chocolate as a premium product, with new offerings accompanied by a marketing campaign and expanded distribution. If successful, this initiative could drive further sales and lead to better revenue and earnings for the company.
Rollins(NYSE: ROL) provides pest control services and protection against insects, termites, and rodents for more than 2.8 million customers. That's an essential service that customers who need it will generally pay for regardless of economic conditions, and this is reflected in its financial results.
Revenue increased steadily from $2.2 billion in 2020 to $2.7 billion in 2022, and net income rose by 38% over the same period from $266.8 million to $368.6 million. The business also has low capital expenditure requirements, allowing it to generate copious free cash flow. Rollins' annual free cash flow from 2020 to 2022 averaged $407.5 million, allowing the pest control company to pay out steady dividends to its stockholders.
So far in 2023, its growth has continued. In the year's first three quarters, Rollins posted a 14% year-over-year rise in revenue to $2.3 billion. Operating and net income increased by 18.9% and 14.7% year over year, respectively, to $444.2 million and $326.2 million. Free cash flow improved by close to 11% year over year to $354.3 million.
This strong performance allowed Rollins to increase its quarterly dividend by 15% to $0.15 per share. The company completed the acquisition of Fox Pest Control back in April and expects this purchase to add to earnings and cash flow in its first full year of ownership. Management also intends to improve margins through the execution of a modernization program while balancing cash flow needs for share buybacks and acquisitions.
Monster Beverage(NASDAQ: MNST) produces energy drinks under brand names such as Monster, Ignite, Reign, Full Throttle, and Predator. The beverage manufacturer enjoys a loyal following, and its sales and profits have risen steadily over the past few years. In 2020, net sales came in at $4.6 billion; by 2022, sales had risen to $6.3 billion.
Net income, however, was negatively impacted by supply chain bottlenecks and rising costs -- it declined from $1.4 billion to $1.2 billion over this period. Despite this, Monster Beverage generated consistent positive free cash flow throughout these three years.
The company appears to have overcome these challenges this year. It posted stronger top- and bottom-line performances in the first three quarters of 2023, along with a recovery in gross margins from 49.8% to 52.8%. Sales rose 12.8% year over year to $5.4 billion and operating income jumped 27.6% to $1.5 billion. Net income surged by 42% to 1.3 billion. Free cash flow more than doubled to $1.2 billion from just $449.5 million in the prior-year period.
Monster Beverage has also been active in acquisitions, scooping up CANarchy Craft Brewery for $330 million last year and Bang Energy for $362 million in July. The company launched its first flavored alcoholic malt beverage product -- The Beast Unleashed -- during the third quarter, and hopes to make this product available nationwide by year's end. A new hard tea product, Nasty Beast, will also make its debut in early 2024 in four flavors.
The combination of its acquisitions and its innovative new product launches should keep powering Monster Beverage's revenue and earnings momentum in the years ahead.
10 stocks we like better than Mondelez International
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Mondelez International wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 20, 2023