When you think about it, corporations are no different than consumers. They see the economic writing on the wall, and they react to it accordingly. So it was no surprise when PepsiCo's (NYSE: PEP) CEO Indra Nooyi said she was down on beverage acquisitions in North America. Instead, she'd like to drive profits in an organic fashion. In my opinion, she's basically saying that she doesn't feel that the economy has hit a bottom yet and that she's got time to look around for prospects to add to her company's portfolio.

I think she's probably correct (if she actually is thinking along those lines), but I would add that, if a particularly compelling prospect came along, I wouldn't necessarily reject it in knee-jerk fashion just because the economy is one scary beast. Remember that PepsiCo, or any company for that matter, can buy other businesses for cheap valuations at the moment. Of course, those other businesses know that, and probably are holding off from putting themselves up on the block. So I do realize that being a value buyer in this climate is more complex than it appears to be at first glance.

She's also on the right track in terms of concentrating on growing internally. I don't think companies focus as much as they should on internal growth. As Nooyi pointed out, organic innovation can indeed be the more attractive economic alternative to pricey buyouts.

Continue reading PepsiCo, like the consumer, is cautious about buying things

PepsiCo, like the consumer, is cautious about buying things originally appeared on BloggingStocks on Tue, 16 Dec 2008 11:32:00 EST. Please see our terms for use of feeds.

PepsiCo (NYSE: PEP), major rival of Coca-Cola (NYSE: KO), is letting the investing world know that it's doing fine. In one of the shortest press releases I've ever read, management at the beverage maker let shareholders in on the fact that it intends to reiterate guidance at The Deutsche Bank Global Consumer and Food Retail Conference that takes place next week in Paris. PepsiCo believes it's still good for $3.72 per share in earnings for the fiscal year.

When the world seems to be heading for the dark pits of economic hell, it's nice to know that PepsiCo expects to be able to stay the course and deliver on an earlier forecast. After all, with all this talk of inflation, one would have to wonder how companies like PepsiCo and Coke can possibly remain stable given the difficult input-cost environment. The big question on my mind is how high these two companies might rise during the summer, since they are considered defensive plays. They didn't seem defensive at all on Wednesday during the Dow's 200-point bleed, but my gut is telling me they might be good short-term plays.

They certainly are excellent long-term plays, and while I own Coke, I'll concede that right now, in terms of P/E ratios and dividend yields, an investor wouldn't go wrong with either. And, yes, I'll further concede that one gets an added bonus with PepsiCo since it owns the strong Frito-Lay salty-snack business. But with both stocks down over the last six months (As of this writing, PepsiCo is down more than 11% for the six-month period while Coke is down more than 9%), and with problems in the markets, they might be interesting ideas right now. Again, though, the effect of input costs must be part of your due diligence before buying.

Disclosure: I own shares of Coke; positions can change at any time.

PepsiCo not backing down from its previous guidance originally appeared on BloggingStocks on Thu, 12 Jun 2008 11:00:00 EST. Please see our terms for use of feeds.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

Behold the humble potato chip, snack food of the ages. Claimed to have been invented in 1853 in the road house kitchen of Native American George Crum, the potato chip traveled through American snack history in a class of it's own. That is, until in the early 1960s, when it was discovered that you could grind potatoes into a slurry and then press them back into a consumable form.

I sat down one day with a bag of potato chips from Lay's and with a can of Pringles. Lay's are made by Frito-Lay, a property of PepsiCo Inc. ( NYSE: PEP). Pringles are made by Procter & Gamble Co. (NYSE: PG). I wanted to compare the two in order to assess their similarities and differences. What I found were two very different snacking sensations although both are derived from the same source. The Lay's ingredient list is simple. They're made with potatoes, oil, and salt, with no preservatives added. The Pringles ingredient list begins with the same potatoes, oil, and salt, but the product also contains at least traces of wheat starch and rice flour in addition to a couple common food chemicals.

Continue reading Battle of the Brands: Lay's potato chips vs. Pringles

Battle of the Brands: Lay's potato chips vs. Pringles originally appeared on BloggingStocks on Tue, 06 May 2008 14:07:00 EST. Please see our terms for use of feeds.

PepsiCo reiterates earnings outlook originally appeared on BloggingStocks on Wed, 14 Nov 2007 10:10:00 EST. Please see our terms for use of feeds.

Pepsi earnings: Does it again originally appeared on BloggingStocks on Tue, 24 Jul 2007 09:00:00 EST. Please see our terms for use of feeds.

Have you had your fruit (product) today? originally appeared on BloggingStocks on Mon, 09 Jul 2007 15:14:00 EST. Please see our terms for use of feeds.

Colorado student gets lunchtime surprise originally appeared on BloggingStocks on Fri, 16 Mar 2007 15:45:00 EST. Please see our terms for use of feeds.