Coca-Cola Company (KO)

Pepsi (PEP-N) versus Coca-Cola (KO-N)? Prefers Pepsi because it also has all the junk food too. Likes the diversification. This company has come off but Pepsi has held up better because there is a US hedge fund manager that wants to split it up.

Stock has really lagged but they have brought in their bottling groups and can wring out some synergies from them and resell them down the road. They have water, vitamin water, Powerade, etc. Expectations for this company are very low. Through synergies and growing outside of North America he can see earnings from emerging markets growing maybe 8% over the next couple of years.

With this you are getting a relatively low beta type of stock. Decent valuation at 20X earnings. Consistent 9%-10% growth rate. Premier brand name. They are moving into more of the juices and the waters, etc.

The difficulty with soft drink makers is that the sugared beverage business has really been going flat for some time. When you look at what it is trading at compared to its earnings, it is a very expensive stock. When he sees a stock trading at double its growth rate, red flags start to go up.

This is trading right on his model price of $40.15. It is very rare to get this stock at his model price. He sees large cap value stocks doing very, very well over the next 3-5 years.

Would take a significant pullback for him to be interested in it. Soft drinks are not a growth area. But they are executing, and a pristine, well known brand.

Have been focused on carbonated soft drinks but had been able to adapt to the times and bring on more products. You can’t argue with their execution and their brand value. However, it is not a cheap stock. Probably fairly valued and he wouldn’t be rushing in. Would wait for a setback and try to get it 10%-15% lower.

Great company to hold for the long-term. Valuation is not so attractive. Prefers Dr Pepper Snapple (DPS-N), the 3^rd biggest soft drink maker and he is excited about their new line of soft drinks and their introduction into emerging markets. Expects that at some point in time, Coca-Cola or PepsiCo (PEP-N) will acquire this company.

Trading at about 17-18 times earnings. It is growing but at best, high single digits. Its multiple is outsized to its fundamentals. Soft drink business has really not been doing well.

(Market Call Minute) Prefers Pepsi. Prefers snack food.

When you own this one, it is a little bit boring, a low beta stock at 0.7 versus others. You are going to get a long-term growth rate of about 7%-8%. Dividend yield of 2.7% and he expects this to grow by about 7%-8% per year for the next 3 years.

PE in the high teens. Consistently make money and have been consistently growing. As long as the business continues to do what it has been doing, that multiple will be there and the stock price will go up as much as they grow earnings. The risk to this is that if anything ever does happen to the business, the threat on the downside is that you have the valuation pulling off. Also, there isn’t really much upside if you are looking for capital gain.

Consumer discretionary is getting a bit tired. There has been a violation of the run up, so it is over for a while.

Doesn’t find the valuation that attractive. Growth is slowing down a little bit. Haven’t added the product categories at the same rate that Pepsi (PEP-N) has. You won’t lose money on it but he doesn’t see big upside. Earnings growth has clearly slowed down.

Stable company, good grower over the long term. If we have a shock to the markets in 2013 with the fiscal cliff, that would be a better time to put money to work. Buy it closer to the 52 week low.