PepsiCo (PEP)

Was downgraded today. Demand for Pepsi in North America has been terrible. It's a small position for him. Is -5% this year. Coke is up 20%.

Faces GLP-1 weight loss drugs, weakening North American consumer and North American business is fading. Valuation is cheap, though. Is attractive if it falls 20-30%.

Last quarter they reported super numbers which sent shares soaring. But the market rotation has knocked shares back to that starting point. The dividend now pays 4%. This is a buying opportunity.

It is part of the consumer staples sector and is not popular since its products are not considered healthy, especially those with high levels of sugar. There are better opportunities elsewhere in the sector. There is a shift to more healthy products.

They report Thursday. He's impressed by how they've dealt with the rise of GLP-1 drugs and healthy diets among the young. The CEO listens to customers.

 It reports Tuesday. He worries about it because of its snack division which has been struggling against the weight-loss drugs. Shares moved up today.

They report Thursday. They've had it tough lately, but have a strong Frito-Lay snack franchise. Also pays a solid 4% dividend. However, the younger generation is watching their health, and people are taking weight-loss drugs, GLP-1 which diminishes cravings. PEP is -7% this year vs. Coke +7%.

Pays a safe 4% yield. Shares are bottoming now. Own, don't trade.

Remains a premium growth company. Elliott Management just took a big stake, and he likes this activist firm. Shares are 7 points below before Elliott stepped in--a bargain. Also, this yields almost 4% because shares have fallen so much.

It reports Thursday. It trades at a low 17x PE. Headwinds: GLP-1 drugs, RFJ Jr. who despises junk food though embraces junk science, and the desire to stay healthy. It's a tough industry.

He sold in 2024 when the valuation started looking a bit full. When pandemic inflation hit, "elasticity" was low so that consumers kept buying despite higher prices. Cumulative effect of inflation caught up to them. Not tempted, given slowing macro economy and inflation genie not fully back in the bottle.

Operates in a cola duopoly with KO, good job creating shareholder value. He likes market leaders like these that have little to no direct competition, so this name fits that bill. That being said, it's a lot harder these days with consumer brands to establish a brand and build a moat. Today he could launch a cola company online, using Instagram and FB, with very little cost and effort, and with luck it could even go viral. Brands will have a tough time. 

Very strong, well-established brand. PEP got into snacks, which are up against healthier lifestyles. He owns FEVR, take a look at that one.

An amazing company and major soft drinks maker. Shares are far from its last highs, so low that the dividend now pays 4.42%. Suppose RFK Jr. goes after companies that produce caloric snacks? Share are very undervalued, but who knows when shares will stop going down?

Yields 4%, well-run and can start a position at 16x PE. They will right the ship.