According to top-level experts and executives in the beverage industry, there are several major trends that investors should pay attention to this year.
Long gone are the days when beverage-makers could inject their cans and bottles full of sugar. Americans today are more health-conscious, focusing their fire on companies like The Coca-Cola Co (KO) that have been blamed for contributing to rising rates of obesity.
Since 1998, soda and orange juice sales are down 25% and 45%, respectively.
In many cases, the beverage-makers are being forced to adapt to the new reality they face. With investors demanding growth, companies like PepsiCo, Inc. (PEP) are looking into the creation of new brands and product positioning in hopes of scoring big in an already saturated market.
That said, consumers are becoming interested in non-GMO products such as a line of Tropicana juices and organic Gatorade that are likely to be debuted sometime this year.
To reduce calorie consumption without losing sales, beverage companies like Pepsi and Coke are also offering smaller containers.
In keeping with the American Beverage Association’s goal to cut calories 20% by 2025, serving smaller cans and bottles achieves the objective without having to rework the recipe using less sugar.
With these challenges and more, let’s use Profit Scanner to see where some of the major players have been and where their stock prices are likely to go over the next few months or so.
Beverage Stocks to Buy: The Coca-Cola Co (KO)
Coca-Cola has held firm over the past year, slowly gaining momentum off of its mid-September 2015 price lows and again with a break above its 50-day moving average in early February this year.
Utilizing Profit Scanner’s Technical Event Lookup feature, three bullish technical events appear (MACD, Double Moving Average Crossover (21-week above 50-week) and an intermediate-term KST).
The first of these events triggered back on Oct. 2 last year when KO was trading for $40.39 per share. At the current price of $46.51, investors would have pocketed a 15.15% return, plus the 2.88% dividend payout rate just for holding onto the stock.
Beverage Stocks to Buy: PepsiCo, Inc. (PEP)
PepsiCo still appears range-bound, but the situation could change based on the higher highs we’re seeing in KO.
The good news is that the Profit Scanner signaled two bullish events to start the year where the stock crossed above the 50-week moving average on Jan. 29 and then crossed above the all-important 200-day moving average on Feb. 12.
Profit Scanner tells us that we should keep an eye on intermediate-term support at $100 below and also resistance found at $103.20. Should PEP’s price break above key resistance on better-than-average volume, we would consider it a significant breakout move.
Beverage Stocks to Buy: Monster Beverage Corporation
On the other hand, Monster Beverage Corporation (MNST) is in the later stages of its major bull run (if it hasn’t ended already), which began in late 2008 back when the stock was trading for a paltry sum of about $10 per share.
This makes sense given that the energy drink is a relative newcomer to the stage and experiencing growth that far outpaces the more established brands of Pepsi and Coca-Cola.
But having climbed so far and so fast, the bulls are showing signs of fatigue. Although shares have recently found a way to get back above the 50-day moving average, MNST still trades below its longer-term 50-week and 200-day moving averages.
But back on Nov. 30 last year, investors who had signed up to receive Profit Scanner event alerts were given a major bearish signal when the KST oscillator broke down. With shares trading at the event price of $154.61 closer to the peak, those who took profits or shorted the stock are more than pleased.
On the latter point, anyone betting that the stock would fall saw shares hit a February low of $113.08 for gains up to 26.86% inside of three months.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.
