The money manager explains, "Investors should take heart that there are companies they can invest in at very low valuations in emerging markets. And in the particular case of Latin America, many have U.S.-listed ADR's that have plenty of liquidity and are very accessible and cost-effective to buy.
"We think that Mexico is probably the best positioned Latin American country from a risk perspective because, obviously, with 86% exports to the U.S. it's very reliant on the U.S., but it's still seeing very healthy internal growth irrespective of what's going on in the U.S.
"A company that we like there is FEMSA (NYSE: FMX). It produces, markets and distributes Coca-Cola, Dos Equis, Tecate Beer and a lot of other beverages across Latin America. It also operates something that's very comparable to our 7-Eleven stores.
"They're called OXXO convenience stores. Very strong sales and EBITDA growth, despite the presumed slowdown that's been occurring as it relates to the U.S.contagion effect,and valued very attractively at 8 times EBITDA."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
Talk about a tough time in the markets. Between the financial crisis and oil prices rising on an almost daily basis, with the Fed damned if it raises rates and damned if it doesn't, the floods in the Midwest are now threatening to make a trip to the supermarket much more expensive. Yes, break out the coupons and pray for sales, because, according to The Wall Street Journal [subscription], food prices are destined for one direction: higher. That's because a lot of farmland has been damaged, throwing the supply-demand dynamic into chaos.
What does this mean for investors? Look for potential pressure on the stocks of companies such as Coca-Cola (NYSE: KO), PepsiCo (NYSE: PEP), Kraft (NYSE: KFT), Kellogg (NYSE: K), General Mills (NYSE: GIS), and Hershey (NYSE: HSY). I happen to own Coke, and I've heard the news reports talking about how higher corn prices will affect Coke and Pepsi because they use corn syrup as an ingredient for their sodas. It's also been pointed out by others that PepsiCo owns Frito-Lay, and since that company manufacturers salty snacks such as Doritos and Tostitos (I love them both), corn prices will also have an impact on that division.
If you're a trader, be wary. We might be in for a rough ride this summer with not only the stocks I've mentioned here, but in a general sense. Since I own Coke, I've been acutely aware of the pullback experienced in that stock as the external pressures surround it. As I write this, the stock is trading at $54.27. The shares were over $65 during their wonderful stay at the 52-week-high suite. So, yes, buyers with short-term mentalities must be wary. However, long-term investors should look upon any pullbacks as potential opportunities for some of these food-selling companies. If you don't intend to trade, then adding to a Coke or Pepsi position might make sense.
Disclosure: I own Coke; positions can change at any time.
So here's the deal: soda sales have been on the decline as consumers flock to better-tasting, ostensibly healthier, more "natural" beverages like Vitamin Water, which is owned by Coca Cola (NYSE: KO).
According to Beverage Digest, U.S. soda sales in major retail channels overall declined 3.5% in the first quarter, and convenience-store sales dropped fell 4.2%.
How does the soft drink industry plan to combat the trend? According to the Wall Street Journal(subscription required) , "To win back sales, several Coca-Cola and Pepsi bottlers are conducting pilot tests on a variety of bottle sizes they hope will appeal to consumers put off by the 20-ounce bottle or looking for a cheaper option to cushion the blow of high food and energy prices."
I'll be shocked -- shocked -- if this does anything to boost soda sales. Soda sales are declining for a very good reason: soda is bad for you and people now have great-tasting alternatives. At the risk of being alarmist, I think that soda sales -- at least in the United States -- are in a permanent state of decline. I think Coke knows that: they saw the future and bought Vitamin Water.
Coca-Cola Co. (NYSE: KO) really needs to get things going in the North American territory. If you take a look at Coke's latest earnings report, you'll see that unit case volume moved up 1% for the fourth quarter, and down 1% for the entire fiscal year. That's well below the 6% growth in volume experienced overall. It's no wonder that the Associated Press highlighted the problem in North America in a recent article on comments made by Coke's COO Muhtar Kent (he will be the new CEO starting July 1) at a conference in Boca Raton, Florida.
Kent mentioned Coke Zero and the VitaminWater brand -- which Coke gained after acquiring Glaceau last year -- as being two key beverages to leverage to drive growth. They will probably help. I recently tried some of that VitaminWater stuff the other day -- not bad, although I suppose its appeal goes beyond the taste factor, as it basically relies on the consumer feeling healthier after drinking it (at least in terms of perception).
PepsiCo (NYSE: PEP) reported Q4 and full-year earnings today, and the Street liked what it saw. Personally, I'm a fan of Coca-Cola (NYSE: KO), mainly because I own the stock -- well, that's pretty much the only reason, since I actually prefer Pepsi's soda over Coke's (although I do like Diet Coke best of all). As of this writing, it's up about 5%.
Net revenue grew 17% for the fourth quarter and 12% for all of 2007. That's great double-digit growth, but the bottom line actually declined 29% in the fourth quarter and rose a flat 2% for the full year. That was on a GAAP basis. Excluding various items, net income actually grew 8% in Q4 and 13% in 2007. Full-year operating cash flow jumped 14%, and it was more than enough to cover capital spending and the blue-chip dividend (the latter of which is a key reason why investors put this stock on buy, hold, reinvest, and forget!).
Snack volume -- remember, Pepsi owns the tasty Frito-Lay portfolio and the Quaker brand -- grew 6%, while beverage volume expanded by 4%. Pepsi expects higher operating cash flow for fiscal 2008 -- $7.6 billion versus the $6.9 billion generated in 2007 -- and it is planning to continue share repurchases. Yes, I suppose I'd rather you buy shares in Coke since I own them, but truth be told, investors will probably do well owning either beverage company (I do concede that I envy the Frito-Lay asset).
Disclosure: Steven Mallas owns shares in Coke, and might buy more at any time.
The cola wars between Coca-Cola (NYSE: KO) and Pepsi (NYSE: PEP) that consisted of a high-profile battle for carbonated supremacy are quiet for now and, according to some experts, it's hurting the industry.
Some industry experts predict that soda sales will decline 1% per year for the next ten years. The accuracy of such a forward-looking prediction aside, it puts a lot of pressure on the soda companies.
Coke responded with its high-profile acquisition of Glaceau, the maker of VitaminWater, and Pepsi is preparing the launch of Tava, "An Inspired Sparkling Beverage" promising "Zero Calories. Zero Caffeine. Zero Worries." The packaging looks slick and the flavors -- Tahitian Tamure, Mediterranean Fiesta, and Brazilian Samba -- certainly sound enticing. The product will launch in the first half of 2008, but Pepsi investors should be wary of putting too much faith in it. A large percentage of new beverages fail to catch on with consumers -- Remember Crystal Pepsi, Pepsi Blue, and New Coke?
Maybe they'll be able to compensate for the decline in categories like energy drinks and vitamin-enhanced water -- but investing in Coca-Cola when you think Coke is headed for a long decline seems silly -- especially given that the stock hit a multi-year high on Friday.
With the decline -- and expected continuation of the decline -- in soft drink sales, you also have to wonder about Jones Soda's (NASDAQ: JSDA) prospects. The company has its own serious internal problems, and trying to make a comeback in a declining industry could prove too much for it to handle.
Perhaps big new marketing campaigns and a rebirth of the cola wars can help brighten soda's prospects -- but if the decline is caused by factors like increasing health-consciousness and a preference for noncarbonated drinks, it might just be a big waste of money.
Hansen Natural (NASDAQ: HANS) implied volatility Flat as HANS near record high. HANS markets and distributes beverages. HANS has a market cap of $4.69 billion. Goldman Sachs says "we continue to be optimistic about the company's prospects for the full-year and into 2008 based on; 1) distribution benefits from the Anheuser Busch (NYSE: BUD) agreement, and 2) the positive early read on the newly launched Java Monster." HANS October option implied volatility of 43 is near its 17-week average according to Track Data, suggesting non-directional price risk.
Cott (NYSE: COT) volatility Elevated as COT sells off 18% on lower guidance. COT, a supplier of retailer brand beverages, is recently down $1.89 to $8.27.COT lowered financial guidance, citing weaker than expected volumes and higher input costs. BMO Capital Markets says "if there is good news, it is that some degree of the profit warning may already be priced into the share price." COT announced on 4/13/07 "COT has responded to interested parties that have approached the Company, and is exploring the potential benefits of participating in possible industry consolidation." COT October option implied volatility of 56 is above its 26-week average of 40 according to Track Data, indicating larger price fluctuations.
Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
If your coffee-break companion prefers a root beer to a iced latte, he or she may soon be out of luck. Starbucks (NASDAQ: SBUX) is taking Jones Soda (NASDAQ: JSDA) off its shelves, after stocking the soft drink company's root beer and black cherry beverages since March 2004 in the U.S. and since 1999 in Western Canada stores. The pops/sodas/cold drinks (depending on your region) will be pulled by the end of June.
A SBUX spokesperson noted that "[Jones] has been a very good partner, but we decided to move in a different direction." In a less vague statement, the company said it intends to use the extra refrigerated space -- now made vacant by the elimination of Jones products -- to chill additional cold-food offerings for Starbucks patrons.
Jones Chief Executive Peter van Stolk noted that "We are working with [Starbucks] . . . and we will support them in many ways." He also noted that the two companies, both headquartered in Seattle, have a "relationship that we will work on building," asserting that "We are good partners."
As for the bottom line, van Stolk opined that its exclusion from the Starbucks chain will not severely impact revenue, and a Stifel Nicolaus analyst said that sales in SBUX stores probably represented less than 3% of total Jones sales. An analyst with ThinkEquity Partners, however, was quick to say today's news "is certainly not favorable . . . now we have a shrinking situation [for Jones Soda]."
In early trading, JSDA shares have dropped 5.7% after a loss of nearly 4% in Wednesday's session.
In titling this post, I was going to go with the inevitable pun of "Zero being The Coca-Cola Company (NYSE: KO) Hero" but, unfortunately,TheWall Street Journal beat me to the punch. As consumers move away from soda and toward more healthful premium beverages (such as Vitamin Water, my personal favorite), Coke has had surprising success with Coke Zero, a zero-calorie version of Coke which apparently tastes less like poison than regular Diet Coke. According to Coca Cola Chairman and CEO E. Neville Isdell, the initial success of Zero makes it Coke's most successful new product launch in 20 years.
As a young consumer, I believe that Coke Zero's success is largely a function of slick marketing campaign. They've actually managed to make diet soda cool. The slick ad campaign, which included slick, GQ-esque ads, in addition to funny ads that invited readers to sign up for a class-action lawsuit suing Coke Zero for tasting too much like regular Coke.
As beverages from companies like Jones Soda gain in popularity and cache, the traditional soft drink companies will need to revitalize their images. Coke has done just that with Coke Zero and they will probably continue to experience success.
PepsiCo. Inc. (NYSE:PEP) is encroaching on Coca-Cola Co.'s (NYSE:KO) turf at McDonald's Corp. (NYSE:MCD).
Some McDonald's restaurants are selling Pepsi's Gatorade, Propel Fitness Water, Lipton Iced Tea, Tropicana orange juice, and Mountain Dew, according to the Associated Press. McDonald's had sold Coke's products exclusively since 1955, the AP said.
This is obviously a huge win for Pepsi. Demand for non-carbonated beverages is rising at a much faster pace than soda. It's the latest front in the cola wars. This will certainly help Pepsi over the long term.
Investors, though, continue to bet on Coke. Its shares have jumped 12 percent this year compared with 5 percent for Pepsi. Going forward, it's a different story.
Fourteen out of 16 analysts rate Pepsi shares either a buy or a strong buy. Two rate it a hold. Their median price target is $73 about $10 above were it currently trades.
Analysts are expecting on average for Coke to hit $53 in the next year, about $5 above its current price. Twelve out of 17 analysts rate Coke either a buy or strong buy and five consider it a hold.
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Here's a rundown of other market news:
DaimlerChrysler AG (NYSE:DCX) is being considerate to potential buyers of the Chrysler. The automaker will give information "selectively" to potential buyers, according to Reuters. That avoids the awkward situation of having an auction where no one bids. Maybe they ought to call the Keno twins from PBS' "Antiques Roadshow." If these guys can get top prices for antique furniture, imagine what they could do with a money-losing automaker?
Best Buy Co. (NYSE:BBY) is under investigation by Connecticut Attorney General Richard Blumenthal after consumers complained that they weren't able to find merchandise at the company's stores at prices advertised on its Web site. Blumenthal is an attorney general that other states watch.
From the eew department, Bausch & Laumb Inc. (NYSE:BOL) is recalling 1.5 million bottles of its ReNu MultiPlus contact lens solution "trace amounts of iron could cause the cleaner to lose effectiveness earlier than normal," the Associated Press said. No one has reportedly been hurt.
Coca-Cola Co. (NYSE:KO) and PepsiCo Inc. (NYSE:PEP) are poised to introduce healthy sodas because sales of carbonated beverages are flat (pun intended), according to the New York Times. Tom Pirko, who runs a food an beverage consulting firm, is skeptical telling the paper that consumers think diet soft drinks are "the antithesis of healthy."
These people obviously haven't tried Coke Zero. Great stuff.
George Carlin is going to have a blast with this. In an effort to improve the unhealthy image of soft drinks/soda/pop/tonic, the Coca-Cola Company (NYSE:KO)is going to start referring to its product as a "sparkling beverage." Sales of these sparkling beverages were down 5% last year, as consumers sought healthier alternatives.
To be fair, Pepsi(NYSE:PEP) and Coke are making substantive changes as well. Coke is launching a new version of Diet Coke with vitamins and minerals and Diet Pepsi Max will be enhanced with ginseng and more caffeine. Both companies are also working on "hybrid brands" that will combine the appeal of soda (er...sparkling beverages...) with the healthier aspects of other beverages. And then there's the controversial Enviga, which claims to burn calories. Pepsi will also be changing the design of the Pepsi can 35 times this year, compared to four changes in the past 60 years.
Time will tell whether these marketing changes and product innovations will pay dividends for the soda companies. But I'm extremely skeptical that referring to soda as something other than soda will enhance its reputation. What do you think?
Tonight on Cramer's MAD MONEY on CNBC, Cramer thinks that Jones Soda Co. (NASDAQ:JSDA) could be the next Hansen Natural Corp. (NASDAQ:HANS). This stock closed at $10.65, representing a $270 million market cap, but shares popped up more than 15% to almost $12.50 after Cramer touted the name.
He thinks this is a lot like HANS was back before its stock became popular (in the first half of 2006, the price more than doubled, although it's now stablized at about 75% above its 52-week low). He likes the company's premium sodas. JSDA has P/E ratio of 82x, and there are only two analysts that cover the company, both with a neutral rating. It has $0.12 earnings estimates for this year and he said that is 100% growth from 2006, but he didn't note the earnings multiples. According to Cramer, Jones is one of his regional-to-national plays that may really break out. He thinks the National Beverage win will really help it and noted briefly that the company was also a possible acquisition target.
The stock has doubled recently and Cramer was not allowed to discuss it before because the market cap was under $250M. He said you can't buy a lot of it because it is too small and you have to use big limit orders. He said buy the stock next week after the Cramer after-hours jokers can't take the pain anymore.
PepsiCo, Inc. (NYSE:PEP) funded a study on high fructose corn syrup, which indicates that sugar and high fructose corn syrup have nearly the same effect on the body, and found no difference in the way the two substances contribute to weight gain. (The study is being written up for submission to a journal by researchers at UC Davis.) Pepsi is promoting this study heavily and said in response to Jones' move, "To say cane sugar is healthier than HFCS just isn't true. Marketing a myth for a competitive advantage is irresponsible and short-sighted."
But. But! Pepsi is working on some versions of its most popular sodas, including Sierra Mist and Pepsi itself, that contain sugar instead of high fructose corn syrup -- along with the removal of some preservatives and artificial colors. This news, reported by Beverage Digest magazine, seems at cross purposes with Pepsi's spokesman's claim.
If Pepsi is so sure high fructose corn syrup is safe -- and so interested in making sure consumers believe it -- why would it even dream of converting? Something tells me we haven't heard the end of Pepsi's evaluation of HFCS.
I may have mentioned a time or two that I avoid products with high fructose corn syrup. In fact, I avoid nearly all sodas because of that (in my opionion) toxic, terrible-tasting and generally unhealthy ingredient. While some scientists hem and haw, I subscribe to the theory that high fructose corn syrup is one of the major causes of obesity and the increase in diabetes in our country.
So. I don't drink it, even though I'd love to be a regular quaffer of Jones Soda Co. (NASDAQ:JSDA)'s quirky flavors. I reviewed the company's "Love Potion #6" Valentine's Day beverage back in February and thought the taste was lovely, but the presence of high fructose corn syrup ruined the experience for me.
Today Jones announced they'll be switching to cane syrup in favor of the processed HFCS. And I'd just like to say that I'm really, really happy. CEO Peter van Stolk says this "truly differentiates Jones and provides the consumer with a healthier alternative" -- I couldn't agree more. Finally I have a widely available (Jones Soda is sold in Target Corporation (NYSE:TGT) stores, among others), interestingly-flavored soda that doesn't cause me major health concerns. I'll happily let my children drink Jones (in moderation, naturally) even though sweetened sodas are strictly forbidden in my household.
Talk about a tough time in the markets. Between the financial crisis and oil prices rising on an almost daily basis, with the Fed damned if it raises rates and damned if it doesn't, the floods in the Midwest are now threatening to make a trip to the supermarket much more expensive. Yes, break out the coupons and pray for sales, because, according to 
So here's the deal: soda sales have been on the decline as consumers flock to better-tasting, ostensibly healthier, more "natural" beverages like Vitamin Water, which is owned by 
PepsiCo 
Hansen Natural
If your coffee-break companion prefers a root beer to a iced latte, he or she may soon be out of luck. 
PepsiCo. Inc. (NYSE:
When I was 
I may have mentioned a time or two that I avoid products with high fructose corn syrup. In fact, I avoid nearly all sodas because of that (in my opionion) toxic, terrible-tasting and generally unhealthy ingredient. While some scientists hem and haw, I subscribe to the theory that high fructose corn syrup is one of the major causes of obesity and the increase in diabetes in our country.
Waiting for the other shoe to drop: The looming credit crisis
Closing Bell: Dow down 7.7%; GE, YHOO, MS fall, PGI, MNT soar
Bet on T&A with J&J (JNJ)
