As an investor in the stock market, there are important factors worth considering to enhance the chances of receiving a good return from the investment. Before deciding on what portfolio to create, an individual should analyze the relevant risks and expected returns associated with the businesses. Following the Markowitz model, it is significant to spread the risk that can be incurred in the industry by investing in different firms. The investment strategy suitable for PEP and SBUX is growth investing which allows the investor to focus majorly on future benefits.
Based on a growth investing strategy, an investor that wants to accumulate more capital would consider investing in a portfolio that has average performance in the market. When selecting the stocks, PEP and SBUX had some relative risks associated therefore buying the stocks would mean some degree of acceptable risks in the process (De Franco et al., 2019). Similarly, moderate performance with low risk would imply more return from the portfolio. For growth investing, selection should base on the stocks with a low timeliness index and medium safety rating.
References
De Franco, C., Nicolle, J., & Pham, H. (2019). Bayesian learning for the Markowitz portfolio selection problem. International Journal of Theoretical and Applied Finance, 22(07).