3 Stocks to Cushion Your Portfolio This Earnings Season

Key Points

• Pepsi stock may rebound as lower interest rates and bullish technical signals support its long-term defensive appeal.
• PG stock looks oversold ahead of earnings, with international exposure and upcoming buybacks adding support despite near-term consumer weakness.
• Costco stock remains a long-term winner, even amid short-term valuation pressure, thanks to strong same-store sales and a durable membership model.

Stocks are moving higher ahead of earnings season. Many of the big technology stocks are expected to do well. However, the same can't be said for all sectors. According to FactSet, consumer staples stocks are expected to average negative earnings growth of around 3%. That’s better than consumer discretionary stocks, which are expected to average negative growth of approximately 5.4%.

This bearish earnings outlook confirms that many of the same themes from the first quarter are still in play. Inflation is sticky in some consumer-facing areas like food. Companies are also likely to continue hedging, if not abstaining from issuing future guidance, due to unknowns around tariffs.

Tech stocks are still a strong growth area. However, the sector may be too volatile for investors who value income above growth. The good news is that some defensive stocks can protect portfolios from downside risk and still offer growth.

The Rebound in Pepsi Is Underway

PepsiCo. Inc. NASDAQ: PEP stock is down 11.75% in 2025 and more than 18% over the last 12 months. The company’s revenue has been down year-over-year (YOY) for four quarters. In the last quarter, that slowdown showed up in negative earnings per share (EPS) growth.

There are concerns about persistent inflation putting a ceiling on the company’s pricing power. Investors are also concerned about how a beverage and snack food company will fare when GLP-1 drugs curb appetite for its products.

However, the miss in revenue and earnings doesn’t seem to hint at more than a cyclical shift based on economic pressures. The likelihood of lower interest rates is likely to benefit a company like Pepsi, which can get more shelf space due to its leadership in two categories.

From a technical standpoint, PEP stock shows signs of a bullish reversal with the stock price now above the 50-day simple moving average (SMA). There is potential resistance at the stock’s current level. Investors are likely to get more clarity when the company reports earnings on July 17.

Procter & Gamble Is Strong Under the Surface

Procter & Gamble NYSE: PG is down 9.1% in 2025 and hit a 52-week low on July 15. Some of this is likely due to investors shifting to growth stocks. However, the stock has been in a downtrend since the beginning of the year as consumers look for private label brands.

This was reflected in the company’s third quarter 2025 earnings report. P&G missed on the topline and beat EPS expectations by 1 cent. Moreover, both numbers were down YOY.

Procter & Gamble reports earnings on July 29 and is expected to show growth and margin strength. The company will also announce additional share buybacks in addition to its already announced dividend payment of $1.05 per share.

At 24x earnings, the stock is trading right around the average of the S&P 500, which is at 25.5x. However, PG stock is trading at a discount to its historical averages. Plus, the company generates approximately 50% of its revenue overseas, which is bullish against the weaker U.S. dollar.

The PG stock chart confirms the opportunity. The relative strength indicator (RSI) shows an oversold condition that opportunistic investors can capitalize on ahead of earnings.

Growth in COST Stock Is Inevitable

Among the three stocks in this article, Costco Wholesale Corp. NASDAQ: COST has continued to deliver for investors. Over the last five years, COST stock has posted a total return of 233.5%. The company’s subscription membership model and low prices continue to mean the company is growing and profitable.

However, for investors, this also means that COST stock is expensive. It’s not about the stock price, which was over $1,000 at one point. It’s the P/E ratio, which is over 55x. Stocks can be expensive for a reason, but the combination of a high stock price with a lofty valuation can cause investors to slow down their buying.

That's all that’s happening now. In its last earnings report in late May, Costco delivered a whopping 8% same-store sales growth. But in early July, the company reported 5.5% same-store sales growth for June. That was slightly lower than the 6% analysts expected. It was also a reason for some investors to take profits.

If it breaks support at its 200-day SMA, COST stock could fall further. An area around $957 has served as both support and resistance in the past year, and a 9% drop from the stock’s high in June would be about a 9% drop.