The Money Man Behind Rick Santorum: Who Is Foster S. Friess?
5 Signs You're Getting Robbed at the Hospital
This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.
Full disclosure: in the Pepsi challenge, I prefer Coke. In terms of investments, though, I overwhelmingly prefer PepsiCo (NYSE: PEP). The shares have fallen hard from their January 2008 peak, but PepsiCo won some respect on the Street recently for fearlessly backing its 2008 earnings outlook -- rather than dramatically slashing it, which has become the latest trend among companies large and small.
In the U.S., firms that produce fizzy beverages, snacks, and convenience foods nearly qualify as defensive stocks. Just check out some of the workhorses in Pepsi's product line: Cheetos, 7 Up, Doritos, Aunt Jemima, Quaker Oats, Gatorade, Rice-A-Roni, Fritos, and Rold Gold pretzels. Not to diminish some of the greater accomplishments our country can claim, this list is comprised almost entirely of prepackaged American icons.
Of course, we live in a global economy, and PepsiCo knows it. While Coca-Cola (NYSE: KO) has caught plenty of flack for environmentally unfriendly practices, Pepsi has been a corporate leader in the push for more "green" technologies ... which brings me to my affinity for Chairman and Chief Executive Indra K. Nooyi.
As the owner of two X chromosomes myself, I have an admitted soft spot for women who have risen to power in major corporations. Like female Congress members, we simply don't have enough of them. With her grace under pressure and seemingly effortless business savvy, Ms. Nooyi should pave the way for millions more young women in B-schools across the nation. And I'm not the only one who's smitten; Nooyi was recently named as one of "50 Women to Watch" by The Wall Street Journal, and tapped as one of "America's Best Leaders" by U.S. News and World Report.
While the shares have been pummeled this year, PEP pulled back to round-number support in the $50 region. Previous dips to round-number regions $30 and $40 proved to be solid buying opportunities, and we could be seeing history repeat itself again. The stock could also catch a lift as its long-term 140-month moving average ascends toward its current perch.
Additionally, PEP shares hold up well under adversity. While short interest on the soda stock galloped nearly 19% higher during the most recent reporting period, the equity held firm to its foothold on the charts under the wave of selling pressure.
With steady leadership at the helm and a product line chock-full of classic American comfort foods, there may be no better time than the present to buy PepsiCo at a discount. As of November 30, the stock's price/earnings ratio of 16.2 represents an attractive discount to its five-year average p/e of 22.8.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
12-14-2008 @ 1:29AM
brian said...
7-UP is not a brand that is owned by PepsiCo. Seven-Up is a company owned by the Dr.Pepper Snapple Group. Back in the 1980's Coca-Cola wanted to buy Dr.Pepper and I believe that Pepsi wanted Seven-Up. The FTC would not allow Coca-Cola to purchase the struggling Dr.Pepper brand in the USA. And Dr.Pepper and Seven-Up came together, I believe. Phillip Morris (cigarette company) already owned Seven-Up or ended up owning this combined company (DPSU) which was later bought by Cadbury Schweppes and finally spun off as Dr.Pepper Snapple Group. However, during the time Coke wanted DP and Pepsi wanted 7-UP and were not allowed both Coke/Pepsi got international rights to Dr.Pepper (Coca-Cola) and Seven-Up (Pepsi-Cola). I believe that Coca-Cola has more rights to Dr. Pepper than Pepsi does to Seven-Up. Here in America, Coca-Cola and Pepsi-Cola each held around 30% distribution of Dr.Pepper and Seven-Up products and the remaining amount was handled by Cadbury Schweppes existing Dr.Pepper/Seven-Up bottlers. And this must possibly be the case up in the New York area and why you mentioned 7-UP as a Pepsi-Cola brand although it truly is not a Pepsi-Cola brand here in America. The three soft drink companies in the USA are Coca-Cola, Pepsi-Cola and the Dr.Pepper Snapple Group which owns 7-UP and the rights to its trademark.
1-08-2009 @ 2:15PM
kimberly young said...
I am a first timer at this, but I am very interested in purchasing some stock and would like to know how much a share of pepsi stock for instance, is going for, as well as how I go about purchasing it?