Pepsico Inc. is
a global participant in the soft drink, snack food, ready to eat cereals and
rice and pasta products. Its brand names
include Pepsi, Mountain Dew, Gatorade, Tropicana, Sierra Mist, Aquafina, Lay’s,
Doritos, Tostitos, Cheetos, Ruffles, Walker ’s,
Smith’s and Sabrita’s. The company has
grown profits and dividends at a 9-13% pace over the last 10 years earning a
25-30% return on equity. PEP should continue to grow at an above average
rate because:
(1) a strong new
product pipeline which is being augmented by initiatives such as ‘Smart Spot’
which marks healthy choice products,
(2) rapidly
expanding international sales. PEP
is aggressively introducing its products into China , India , the Middle
East , Africa and Latin America ,
(3) improving
productivity by increasing its merchandising effectiveness and lowering costs,
(4)
aggressive marketing and brand building.
(5)
acquisitions,
(6) stock buyback
program.
Negatives:
(1) sluggish
beverage growth in North America ,
(2) rising raw
material costs,
(3) economic
uncertainty impacts consumer spending.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio Since 2004
Ind Ave 2.3 10 38 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 37 24 NA 14 NA
Chart
Note:
PEP stock made good progress off its January 2009 low, surpassing the downtrend
off its January 2008 high (straight red line) and the November 2008 trading
high (green line). Long term, the
stock is in an uptrend (blue lines).
Intermediate term, it is in an uptrend (purple lines). The wiggly red line is the 50 day moving
average. The Dividend and Aggressive
Growth Portfolios own full positions in PEP.
The upper boundary of its Buy Value Range is $76; the lower boundary of
the Sell Half Range is $100.
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