PepsiCo (PEP)

Sold his holdings because of valuations. Currently trading at about 21X earnings. The growth metrics started to sputter. The carbonated beverage market has been a tough one. Last quarter revenues were down year-over-year, which is not a good sign for a company. Earnings were up a little on cost cutting, and they are really getting their growth out of cost cutting. The Frito-Lay part of their business was toppy as well. People are moving towards healthier snacks. He would pass on this.

You have to like the product positioning and the growth they have shown over the last number of years. Valuation is high. It has come down a little bit and they are facing a bit of a headwind because of the stronger US$. If you are a long-term investor, these big US multinationals are better plays on global growth.

Likes it. People aren’t drinking as much as they used to, but PEP-N has a big consumer food and packaging business. He owns DPS-N instead. You can’t go too far wrong owning one of these beverage companies.

Pepsi (PEP-N) or Coke (KO-N)? Year-over-year carbonated beverage sales are down about 9%, which doesn’t bode well for either of name. To combat that they have diversified away by making acquisitions. He thinks this one has done a better job as 50% of their revenues come from noncarbonated drinks. His preference is Dr Pepper Snapple (DPS-N) which has Canada Dry, Crush, A & W Root Beer. This has very little market share outside of North America and their more specific target is into Mexico, the highest soda consumption capital globally. They are gaining traction there.

PepsiCo (PEP-N) or Coke (KO-N)? This one would be the best. The International side is smaller on soft drinks, but that is a growth area. Also, the biggest driver would be diversification through their Frito-Lay side. The whole trend out of both companies is moving away from soft drinks and more into the orange juice, etc.

Activist investors are trying to split them up. 11 of the top selling products in convenience stores are Pepsi products. They are the largest food and beverage distributor in Russia. $93.50 would be the stop.

Frito-Lay is definitely the money maker in this company. Beverages are in a bit of a decline. There has been a lot of talk that they should spin off the 2 companies. It is hard to predict if there is going to be a spin off. This is trading at about 2.5X the PEG ratio. Amongst some of the Consumer Staple names this is a pretty solid name. He prefers Mondelez (MDLZ-Q).

Pretty good year. People who like it think they should spin off their Frito Lay business. The volume growth for soft drinks has been anemic for year.

15% of a portfolio, so is trimming a good idea? Even though the soft drink market is really sluggish, this company has the benefit of having the Frito-Lay group which makes up about 25% of revenue and 40% of profit. Salty snacks are doing extremely well. 15% of a portfolio is getting a little rich in concentration. He would suggest that you halve this and buy something else that you think represents good value. Doesn’t have to be in the same area and it may be better not to be in the same area.

One of the things that saved this company is the fact that they had a food business. There is a push to split up the 2 businesses which might make the 2 businesses better. This company has also been very proactive on food and how it affects health issues.

Trading at 19X forward earnings but more diversified than Coca-Cola (KO-N). There is a view that a new CEO could come in sometime this year and may look at splitting up the company into the snack food business and the beverage company. This is not something he would advocate as it is a hypothetical situation.

Thinks there is more upside in this stock. Over a couple of years it really lagged the market. Very good management. Likes their snack business. Stock has had a big run so if you own, taking profits is more than acceptable at this level.

3 to 5 years. Sold at 80$ mark. It was getting extended against its growth rate. The diversification through salty snacks business gave helped. KO-N stumbled and is a one trick pony. Nothing else in the sector appeals to him. All are too expensive and growth rates are suffering.

Pepsi (PEP-N) versus Coca-Cola (KO-N)? He prefers this one because it has all the junk food as well. Likes the diversification. Coca-Cola has come off but this company has held up better because there is a US hedge fund manager that wants to split Pepsi up.

Has had a huge run since last December. It peaked out a couple of weeks ago and is starting to underperform market. Testing below 20 day moving average. Trend is upside but two of three indicators are negative. We are past seasonal strength to take some really good profits.