Given today's choppy, consolidating markets, if your portfolio does not contain a consumer products defensive stock, consider adding PepsiCo (NYSE: PEP).

Pepsi has all the ingredients for a reasonably safe consumer play: a leading primary brand, product diversification, established market positions, a wide geographical footprint, marketing savvy, and cost discipline.

Pepsi has a large snack operation, but the major business model here is, of course, beverages, led by Pepsi Cola, which vies with Coke (NYSE: KO) for global cola supremacy. Operating in about 200 countries, look for PEP international market share to increase in 2007-2009. The company is also well-positioned in the juice and non-carbonated drink segments, which are also expected to perform well, moving forward. Rising commodity costs may pressure margins, but PEP does have modest pricing power as a response. Superior marketing adds to an impressive corporate operation: Pepsi frequently responds to rival Coke's new marketing efforts with something more trendy and cool, particularly as interpreted by teens and younger adults.

Technically, PEP's chart looks good. Aside from the August 2007 market sell-off, PEP's stock has danced with its 50-day moving average on three occasions in 2007, but the chart otherwise displays a healthy advance, minor correction pattern. PEP's chart has also cleared resistance at $70. Equally important, PEP has been above its 200-day moving average -- the toughest average to break -- for about three years. The P/E of 19 is not cheap, but it's reasonable given the company's growth prospects.

Stock Analysis: PEP is a low-risk stock. If you don't already own a consumer products stock as a defensive, consider adding PEP to your portfolio. Investors with an investment horizon longer than 1 year should be rewarded from PEP's shares. Sell / Stop Loss: $53.

Shares of soft drink giant Coca-Cola Co. (NYSE: KO) have set a new 52-week high in early morning trading after the company posted strong third-quarter earnings this morning.

As we noted in our earnings preview last week, analysts had been expecting to see the company report 68 cents a share for its recent quarter, but were surprised to see the company show actual earnings of 71 cents a share.

The quarter got a good boost from the company's overseas business. Overall, the company had a unit case volume increase of 6% during the quarter. Internationally, case volumes rose by a respectable 8%, with North American case volumes rising only 1%.

The stock hit a new 52-week high this morning, trading as high as $58.89 to start off the day. Shares are currently trading up 1.8% to $58.80, up $1.04.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer

Visit AOL Money & Finance for more earnings coverage.

JPMorgan Chase & Co. (NYSE: JPM), Coca-Cola Co. (NYSE: KO), United Technologies Corp. (NYSE: UTX) and Altria Group Inc. (NYSE: MO) all reported better-than-expected earnings this morning underscoring the continued strength of the economy.

Net income at JPMorgan rose 2% to $3.37 billion, or 7 cents per share, compared with $3.30 billion, or 5 cents, a year earlier. Revenue rose 4% to $16.11 billion. The results included a $1.3 billion writedown and credit loss provisions of $18 billion. Analysts had expected profit of 90 cents on revenue of $16.6 billion. The results stunned Wall Street and highlighted Chief Executive Jamie Dimon's prowess as a cost-cutter.

The picture at Coke was also bright thanks to strong sales outside the U.S. Profit at the Atlanta-based company soared 13% to $1.65 billion, or 71 cents a share, from $1.46 billion, or 62 cents, a year earlier. Revenue rose 19% to $7.69 billion. Wall Street had expected profit of 68 cents.

Meanwhile, United Technologies continued to produce strong results. Net income at the parent of Pratt & Whitney aircraft engines and Otis elevators, surged 20% to $1.2 billion, or $1.21 per share, as revenue jumped 14% to $12.16 billion. The results surpassed the $1.16 average estimate of analysts polled by Thomson Financial.

Altria Group reported net income of $2.63 billion, or $1.24 per share, down from $2.88 billion, or $1.36 per share, because of the spinoff of Kraft Foods Inc. (NYSE: KFT), helped by higher prices and a weaker dollar, according to Reuters.

Visit AOL Money & Finance for more earnings coverage.

After seeing PepsiCo Inc. (NYSE: PEP) beat analyst estimates earlier this week for its third quarter, there are going to be some big expectations for its main rival, Coca Cola Co. (NYSE: KO) when it reports its third quarter numbers next Wednesday.

The stock has been impressing analysts at Citigroup lately. Just yesterday the broker lifted its price target on the stock to $67 a share (the stock is currently trading at $57.50), citing improved fundamentals in its Japanese businesses. The broker currently has a buy rating on the company.

Analysts are expecting the soft drink giant to come through with earnings of 68 cents per share for its most recent quarter, and based on the company's solid earnings history, I would not bet against it this time around. The company last reported earnings back on July 17, posting EPS of 85 cents and easily beating Q2 analysts' estimates by 3 cents. In fact, if you look back at the company's history you will find that it has beat estimates for each of its last seventeen quarters. That's a pretty nice run.

TheStreet.com's Jim Cramer explains why lousy results from a U.K.-based firm bode well for American companies this reporting season.

Tate & Lyle's loss is our gain. That's the only way to think about the big decline in that U.K.-based sugar producer's stock this morning on news that the currency translation from dollars to pounds will kill it.

The declining dollar is going to make some of these earnings in the next few weeks jump off the chart. They will be so much higher than people think they will be for the big exporters, particularly those to Europe (we don't have much to go to Japan) that you are going to be blown away.

The big litmus test this earnings reporting period will be the exposure to these foreign currencies. We fret every day about the dollar, but it is a little ridiculous at this point -- meaning the currency is way too low.

Nevertheless, a Procter & Gamble (NYSE: PG) (Cramer's Take) will kill the numbers, so will a Coca-Cola (NYSE: KO) (Cramer's Take). I know these are at 52-week highs, but we are now going to have to start looking at stocks that haven't gone up that much this year. Take PG; it's only up 9%. That gives it some room. Same with Colgate (NYSE: CL) (Cramer's Take). Those still worth betting on; they can still run.

Oh, and don't forget, for the purposes of next quarter, Goldman Sachs (NYSE: GS) (Cramer's Take) will have more than 50% in earnings overseas. The firm is not going to report for while, but that's still another reason to own it -- and another reason to expect that a foreign company will take a stake in Bear Stearns (NYSE: BSC) (Cramer's Take) before long despite the Buffett denial. If a stake is taken, I doubt it will be domestic.

RELATED LINKS:

• Jim Cramer's Portfolios of the Week
• Cramer: Ignore Wal-Mart's Drug Press, Buy CVS

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Goldman Sachs.

A number of high-profile CEOs must not have provided enough information on their compensation packages. The SEC is sending them letters asking for a little more detail. The agency has already sent out about 300 letters.

According to The Wall Street Journal, the heads of very large companies, including GE (NYSE: GE) and Coca-Cola (NYSE: KO) are being asked to provide more information about how they are paid [subscription required].

Among the things that interest the SEC is how pay consultants make calculations for corporate boards. The Journal quotes the SEC's director of corporation finance, John White, saying, "We're seeing a lot of really vague disclosure" about individual performance goals and targets.

The issue can't really be that hard to resolve, especially at very big companies. They know full well how their CEO's pay is set, who is involved, who is consulted from outside the company, and what the final comp numbers are. It is not rocket science.

It is, however, another area of friction between the SEC and big companies.

Douglas A. McIntyre is a partner at 24/7 Wall St.

PepsiCo Inc. (NYSE: PEP) has decided to change the label on its Aquafina bottled water. From now on it will say "Public Water Source," meaning, basically, tap water -- filtered tap water, but tap water nonetheless. I not only salute the label change but also the fact that Pepsi and The Coca Cola Co. (NYSE: KO) aren't bent on destroying natural springs. They are still, of course, selling us loads of bottles that will need to be discarded later.

I am not the first to speak out against bottled water as a prime example of an industry that has completely "invented" a public need and managed to push it successfully. The result? Depletion of natural springs, huge amounts of bottles added to the already massive quantities of garbage we produce, energy wasted on production and shipping, and increased corporate control over a basic resource -- water. Not to mention the morality of the issue: 2.6 billion cases of bottled water sold in 2006 while people in some parts of the world don't have access to clean water.

But a movement away from this has begun, and hopefully it will slowly make a difference. Only recently, San Francisco's mayor "signed an executive order banning the use of city funds for the purchase of single-serving water bottles." Many restaurants, including Mario Batalli's, will serve only filtered water, not bottled water, even though it is more lucrative. Reuters quotes the industry newsletter as saying that it's more about convenience than health or taste. Well, then, I guess John Sicher, the newsletter's publisher, never heard of empty bottles one can fill with ... tap water.

What to do now? Despite all my objections, this unnecessary industry that has sprung into a multi-billion dollar sector, now has many jobs on the line if it is threatened. I don't doubt that a change is needed, but it can be gradual. Telling people that they're drinking tap water may be the first, small as it is, step into changing consumer perception. As for Pepsi and Coke, I'm sure they'll manage.

A piece in today's Wall Street Journal -- Should you sip your vitamins through a straw? -- raises an interesting point: There is little in the way of research to suggest that products like Coca Cola's (NYSE: KO) VitaminWater are a good way to absorb vitamins. But that hasn't stopped the market from exploding: "The explosion of nutrient-laced drinks reflects consumers' desire for more healthful choices than soda. These drinks' combined U.S. volume more than tripled from 2001 to 2006, according to the Beverage Marketing Corp., compared with 5% growth for the U.S. beverage industry over all."

Critics charge that some of these premium "healthy" beverages have a lot of calories (albeit fewer than soda), are expensive, and lack compelling evidence to back up suggestions that the products are actually that good for you.

But I don't think the average VitaminWater consumer is overly concerned with the assimilation of the vitamins. We drink VitaminWater because it tastes excellent, is more nutritious than soda, and is less artificial. I would guess that very few drinkers of these beverages are drinking them in lieu of vitamins: Most kids don't take a daily multivitamin like they should, so VitaminWater is better than nothing, right?

In any case, I don't think that VitaminWater's nutritional possibilities are a huge part of its appeal, and I don't think Coke shareholders should worry about the demise of that brand should studies emerge suggesting the product has little in the way of tangible health benefits.

The Wall Street Journal's Heard on the Street [subscription] column reported today that PepsiCo (NYSE: PEP) approached Nestle about the possibility of a merger in the spring, but nothing came of it. According to the Journal, the deal fizzled in part because Nestle wanted to focus on healthier products, and didn't feel like Pepsi would be a part of that strategy.

Since nothing came of the deal, it's tempting to dismiss this as a non-story. After all, who cares about an overture made by Pepsi a few months ago that didn't amount to anything?

This report is pretty bullish for Nestle shareholders, and those shares rose about 2% on the news of a merger that didn't happen. It's a great display of the company's strength and optimism about its current strategy that it rejected out of hand an overture from Pepsi, which has such strong brands as Frito Lay, Tropicana and Gatorade.

Apparently Nestle thinks that the future is in healthier foods and beverages. Coca Cola (NYSE: KO) appears to agree, as evidenced by its recent acquisition of Glaceau, the maker of Vitamin Water.

Is PepsiCo behind the times, missing out on the bull market in premium beverages and healthier snacks?

More Vitamin Water news

Beth Gaston Moon: High school vending machines getting more eclectic
Zac Bissonnette: PepsiCo plans a lower-calorie Gatorade
Jonathan Berr: Coke, Pepsi thirst for profits from bottled water
Zac Bissonnette: Experts doubt Snapple will satisfy Coke
Zac Bissonnette: Will Coca-Cola gulp down Snapple?
Joseph Lazzaro: Coke's catching up in the health drink segment
Zac Bissonnette: Coke swallows Vitaminwater
Zac Bissonnette: Coke wants vitamin water
Zac Bissonnette: Coke Zero is no zero, it's a big hit
Sarah Gilbert: Fuze acquisition pits Coke v. Pepsi in ritzy juice war

There's nothing like a stock market at a record high at the start of earnings season to spark investors' enthusiasm. The Dow rode out the week in uncharted heights, finishing Friday at a record 13,907, and there are still weeks of corporate reports to push it higher. Next week offers a bonanza of bellwethers, including Intel, Microsoft, Google, Yahoo, Pfizer and Caterpillar.

Of course, the market's reaction will depend on if companies can keep beating expectations. General Electric (NYSE: GE) turned in a solid report Friday with an outlook that brightened investors' days. Blogger Georges Yared was glad to see GE shed its mortgage unit and up its share buyback program. And if Alcoa (NYSE: AA) is any test, it missed analysts' expectations for its earnings last Monday, but investors sent the stock soaring this past week anyway.

The following are some key reports investors should keep an eye on next week:

When rumors started flying yesterday that Coca Cola (NYSE: KO) was interesting in acquiring Snapple, I was skeptical. I wrote that "an acquisition of Snapple would look like a step down from the Vitamin Water deal, unless it can be had at a great price, which is unlikely. Americans are becoming increasingly focused on healthier, lower-calorie alternatives to soda, and Snapple beverages really aren't much lower in calories or sugar than most sodas."

According to The Wall Street Journal, a lot of industry experts see it the same way. They say that Snapple isn't growing, has been around for a long time, and isn't likely to be the answer for Coke. The recent emphasis on acquisitions at Coke -- Glaceau, Fuze, and now perhaps Snapple -- probably isn't a good sign for shareholders. If the company was experiencing strong organic growth, it probably wouldn't be so focused on deals.

As the Journal points out, "Coke has a mixed record of absorbing hip, niche brands into its establishment-oriented corporate culture, and it is now absorbing two makers of such brands." While Snapple isn't a hip brand anymore, it's also likely to suffer from many of the same problems that soda will suffer from in the coming years: It's very high in sugar and calories. An acquisition of Snapple would be a way of doubling down on the bet that people will continue to buy high-calorie beverages with little nutritional value. Based on the $4 billion acquisition of Vitamin Water, that's not a bet that Coke wants to make.

I'm going to make a bold prediction: Coke will not end up buying Snapple. It's obvious that such an acquisition doesn't make sense, and it will figure that out.

More Vitamin Water news

Beth Gaston Moon: High school vending machines getting more eclectic
Zac Bissonnette: PepsiCo plans a lower-calorie Gatorade
Jonathan Berr: Coke, Pepsi thirst for profits from bottled water
Zac Bissonnette: Will Coca-Cola gulp down Snapple?
Joseph Lazzaro: Coke's catching up in the health drink segment
Zac Bissonnette: Coke swallows Vitaminwater
Zac Bissonnette: Coke wants vitamin water
Zac Bissonnette: Coke Zero is no zero, it's a big hit
Sarah Gilbert: Fuze acquisition pits Coke v. Pepsi in ritzy juice war

On today's STOP TRADING segment on CNBC, Jim Cramer didn't spend too much time talking about the big drops we have seen in the markets in the last 3 days. He does have 3 picks:

He said that PepsiCo (NYSE: PEP) bought a Ukrainian juice maker for $542 million, and that is a good move. Cramer thinks Coca-Cola (NYSE: KO) is more attractive now that it came in.

Dick's Sporting Goods (NYSE:DKS) was one that Cramer went back for as a major grower over its 20% growth targets and plans for 800 stores.

SunTrust (NYSE:STI) is one that Cramer said may be acquired because its size makes it vulnerable. We noted this one in mid-May as a potential takeover candidate.

These picks are all pretty interesting. Dicks and others have shown that despite a weak retail environment in general, some companies can still prosper. This morning there were several retail winners that blew the doors off their same-store targets. As far as Pepsi and Coke, the better one for the current environment and for the time being is most likely going to revolve around which one has underperformed or pulled back more than the other.

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

The CEO of Coca-Cola (NYSE: KO) has decided that the only way to get his bottlers around the world to do a better job of making and selling Coke is to get in there and run them himself.

Coke has begun a program [subscription required] to buy local bottlers and change their management or load their boards with Coke allies. Although some Coke bottlers are independent, others are majority or minority owned by the big soft drink operation.

Coke's program has paid off. Operating profits from bottlers where Coke has a stake are up from $1.6 billion in 1999 to $4.1 billion last year. But, Coke thinks that there is more improvement on the horizon.

The company's plan to improve sales, marketing, and manufacturing is not unlike programs at fast food chains, auto companies, and retailers like Starbucks (NASDAQ: SBUX). Large local operations in important markets can be critical to the financial health of the parent. Coke is being more aggressive than most and it would appear that it's getting results.

Douglas A. McIntyre is a partner in 24/7 Wall St.

Peter Lynch used the term diworsification to describe companies that diversify into industries they know nothing about. Examples included Coca Cola Co.'s (NYSE: KO) investment in shrimp farms and, perhaps, Google Inc.'s (NASDAQ: GOOG) foray into television and television advertising, radio advertising, According to the New York Times:

Google may one day rock the television and radio advertising markets. But its TV plans have yet to take shape, and its other efforts to extend its dominance over online advertising into offline media like newspapers and radio are inching along. The early results are mixed, suggesting that Google's successful transition from online kingpin to credible player in traditional media is far from assured.

Google may be an exception to the diworsification rule, as the company believes that the technology that has made its advertising products like AdSense so successful could revolutionize ad sales in the traditional media. It still begs the question though: With all the growth in Google's core businesses, why venture off into something with which the company has so little experience? While it may work for Google, it tends not to as successful companies that venture off into new industries usually fail.

MOST NOTEWORTHY:

• Hard-disk drive makers Western Digital Corporation (NYSE: WDC) and Xyratex Ltd (NASDAQ: XRTX) were upgraded by Citigroup to Buy from Hold to reflect improving fundamentals; namely easing concerns related to inventory levels and pricing.
• New Century Financial Corporation (NYSE: NEW) was upgraded by UBS to Neutral from Reduce. UBS said New Century's credit outlook is reflected in the shares and its liquidity risk is ok near-term.
  
• The Coca-Cola Company (NYSE: KO) was upgraded by Morgan Stanley to Overweight from Equal Weight on valuation and improving fundamentals, with a price target of $56.

OTHER UPGRADES:

• Sony Corporation (NYSE: SNE) was upgraded by Merrill Lynch to Buy from Sell.