Coca-Cola (KO) and Pepsi (PEP) have battled it out since each came up with their own secret formulas in the late 1800s. And after countess taste tests and marketing campaigns designed to get a leg up over the other company, both are going strong more than 200 years later.
So which soft drink stock is the winner right now when it comes to your money? Let’s find out by comparing Coke and Pepsi head to head.
My fundamental analysis of both companies in Portfolio Grader shows that KO and PEP each earn an overall grade of B right now. Both have strong earnings growth, fundamental strength and buying pressure.
In fact, the two companies are so evenly matched that you could have bought either company during just about any time period and would have fared about the same. For example, both stocks are up about 35% during the last year so there has been no real need to worry which one is the better bet.
So my answer to the big question of which one is the better buy right now is NEITHER.
While KO and PEP are up about 35% in the last year, the beverage company I would buy today is up 145%! Going forward the one beverage company that you should own is Dr. Pepper Snapple Group (DPS)
Dr. Pepper Snapple Group is the bottler and distributor of Dr. Pepper soda and Snapple drinks for North America. Serving Canada, Mexico and the U.S., the company (formerly Cadbury Schweppes Americas Beverages) offers a large portfolio of non-alcoholic beverages including flavored, carbonated soft drinks and non-carbonated soft drinks, along with ready-to-drink teas, juices, juice drinks and mixers. Among its brands are A&W Root Beer, Country Time, Hawaiian Punch, Mott’s, and Schweppes, as well as old favorites such as Verno’s and Squirt.
Dr. Pepper Snapple is the third-largest soda company in North America, after Coke and Pepsi, but this stock’s performance blows away its rivals. In the fourth quarter, the company’s earnings rose to $114 million, or 44 cents per share, compared with a loss of $621 million, or $2.44 per share, in same quarter a year ago, which included $1 billion in non-cash impairment charge. The analyst community was expecting earnings of 43 cents per share on sales of $1.36 billion, so the company’s earnings were 2.3% better than expected and its sales were in-line with analysts’ consensus estimate.
Looking forward, Dr. Pepper Snapple said it expects full year earnings of $2.27 per share to $2.35 per share, compared to analysts’ consensus estimates of $2.22 per share. The company also said its board of directors authorized the repurchase of an additional $800 million worth of the company’s stock.
The bottom line is that Coke and Pepsi will continue to battle it out and grab the headlines, but if you’re interested in owning the best beverage company out there, look no further than DPS.
As of this writing, Louis Navellier ownes shares of DPS in personal or client portfolios.
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