Srikanth Iyer PepsiCo PEP-Q BUY Jul 09, 2012

Great company. Smart to expand into snacks, unlike KO, gives diversification. Executes very well. Issue is valuation, 25+ PE range. As a value investor, not interested. Not sure the Ozempic craze is a threat, need to see ramifications.

It has been a great company for the past 40 years. There has been a consumer revolt on price increases. The growth rate is flat to down in the short term.

The boring name in his portfolio. Yield is 3.1%, very secure, will grow around 6% over time. Very steady name, moving higher. With interest rates starting to fall, low-beta names like this will become more attractive. Paying 21x forward PE for 8% growth rate, not too bad. For the conservative part of your equity portfolio. 80% of shares are institutionally owned, so the smart money's in this stock.

Before they reported early yesterday, several analysts were downgrading it, based on lowering organic growth forecasts, concerns over Frito-Lay, weakness in North America, and others. Results: 1.3% revenue growth vs. 2.7% expected, and -2% food and beverage sales volume. No surprise, so shares actually closed higher by the end of the day. Highlights of Q3: Gatorade gained market share, and core operating expanded 90 basis points despite more spending on ads. Pepsi reiterated full-year earnings growth of 8%. They will add more automation to cut costs and add healthier snacks. The street expected a bad quarter, so it sold off, but the quarter wasn't that bad.

A great consumer staples company. It's smart that they got into the snacks business, like Frito Lay. But it's a slow-growing, low-margin business. Pays a good dividend, but the valuation doesn't attract him, 15-20% too high.

GLP weight-loss drugs have hurt, and in some countries like India PEP has faced headwinds over their use of water, which is scarce is those places. 

It reports Tuesday. The weight-loss drugs make it hard for PEP to thrive. It pays a 3.6% dividend, though.

Historic growth story of Pepsi was the Frito-Lay franchise. Not the growth company it was. Still trades at a reasonably high multiple for its growth rate. International sources of revenue, so the strong USD is a major headwind.

Companies in the snack space have traded off on the fears of GLP-1. Volumes are starting to drop. Growth metrics just don't support the valuations.

Rallied 2.95% in today's sell-off as people sough safety in stocks that do well in a recession. Pays a 3% dividend.