Forget the mantra about Pepsi's North American market's beverage and snack revenue being hurt, yada yada.I'm Reiterating my Buy rating for PepsiCo, Inc. (NYSE: PEP) first recommended on March 13, 2009 at a price of $48.62.
Pepsi has successfully positioned itself in the health and sports drink segment with its Gatorade and Aquafina brands, and Tropicana is still the standard in branded, mass-appeal orange juice. The FY2009/FY2010 EPS estimates for PEP are $3.68 to $4.00.
Who will dance, on the floor, in the round...
Further, Pepsi's market share gains in international markets, from its namesake cola to snacks, will continue to drive solid top-line growth: a company with a 200-country presence, international markets accounted for 40% of FY2008 revenue. Further, the company's decision to add 20% more product in snack packages with no price increase will also undoubtedly support sales, gladden the hearts of shareholders, and no-doubt Doritos lovers, as well.
Stock Analysis: PepsiCo is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in PEP now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your PEP position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $27.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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