Jim Cramer, the “Mad Money” host, is the co-founder and the chairman of the TheStreet.com, Inc. Jim Cramer’s TheStreet.com lists their top stock picks in each industry regularly. He gave a break with his Lightning Round program for some time, so I am focused on TheStreet.com’s stock picks in each industry. In this article, I have listed top six beverage stocks and explained my opinion about them. I have investigated these stocks from a fundamental perspective, adding my O-Metrix Grading System where possible.
Here is a fundamental analysis on the six best beverage stocks picked by thestreet.com:
Stock Name | Ticker | O-Metrix Score | My Take |
The Coca-Cola Co. | 3.62 | Buy After Pullback | |
Hansen Natural Corp. | 2.74 | Avoid | |
Dr Pepper Snapple Group | 3.91 | Hold | |
PepsiCo Inc. | 3.64 | Buy, but alternative is better | |
National Beverage Corp. | 1.69 | Avoid | |
Embotelladora Andina | 5.13 | Hold |
Data obtained from Finviz/Morningstar and is current as of Sep 2.
Coca-Cola is one of the three recession-proof stock picks by Jim Cramer. The company shows a trailing P/E ratio of 13.1, and a forward P/E ratio of 16.4, as of Sep 2. Analysts expect the company to have an annualized EPS growth of 8.0% in the next five years. With a profit margin of 29.7%, Coca-Cola paid a 2.70% dividend last year.
Earnings increased by 17.81% this quarter, and 72.75% this year. Sales rose by 46.84% this quarter. Institutions own 63.69% of the stock, while it is trading only 1.91% of the stock. Target price implies an 11.6% upside potential, while it returned 21.1% in a year. Debt-to assets ratio has been stabilized within the last three quarters. O-Metrix score is 3.62. Debt-to equity ratio is 0.3, far better than the industry average of 1.1. ROA, ROE, and ROI are 19.49%, 41.29% and 29.05%, respectively. Coca-Cola is a dividend pick for the next five years. Insiders have been selling stocks and exercising options for some time. A pullback should be waited for.
Hansen Natural recently declared its quarterly results. As of Sep 2, it was trading at a P/E ratio of 30.8, and a forward P/E ratio of 23.8. Five-year annual EPS growth forecast is 15.0%. Profit margin in 2010 was 16.2%, while it has no dividend policy.
O-Metrix score of Hansen is 2.74, whereas target price indicates a 0.8% increase potential. The company returned 76.9% in the last twelve months, and it is trading 7.32% lower than its 52-week high. ROA, ROE, and ROI are 23.19%, 31.30% and 31.27%, respectively. While SMA200 is 29.54%, SMA50 is 4.77%. It has almost no debts since 2006. Debt-to equity is 0.0, far better than the industry average of 1.1. However, P/B is 7.8 and P/S is 5.1, both of which are strong red flags. Insiders have been mostly selling stocks for a while. P/E- forward P/E ratios are way too high for me, and it has a relatively poor O-Metrix score. Moreover, the company has a two-star rating from Morningstar. There are better stocks in the market.
Dr Pepper will yield a $0.32 dividend on Oct, 7. The Texas-based Dr Pepper, as of Friday’s close, shows a trailing P/E ratio of 16.2, and a forward P/E ratio of 12.9. Estimated annual EPS growth for the next five years is 8.0%. It paid a 3.39% dividend last year, while the profit margin was 9.4%.
Insider transactions have increased by 123.76% in the last six months, and institutions own 96.13% of the stock. Its O-Metrix score is 3.91, while target price implies a 13.5% upside movement potential. The stock is currently trading 12.52% lower than its 52-week high, whereas it returned -1.5% in a year. Yields are OK, and debts are on a free fall since 2008. Gross margin is 59.1%. Debt-to equity ratio is 0.9, and P/S is 1.5, both of which are hardly better than their industry averages. On the other hand, operating margin (17.6%) and ROE (21.0%) are slightly lower than their industry averages. Hold if you own it, but do not buy.
Pepsi has distributed a $0.515 dividend on Aug 31. It has a P/E ratio of 16.3, and a forward P/E ratio of 13.2, as of Sep 2. Analysts expect the company to have an annualized EPS growth of 7.5% in the next five years, which sounds reasonable when its 10.37% EPS growth of past 5 years is considered. With a profit margin of 10.1%, shareholders enjoyed a 3.25% dividend.
Insider transactions have increased by 62.90% in the last six months, and institutions hold 69.59% of the stock. Gross margin is 53.9%, while it has an O-Metrix score of 3.64. Target price is $75.75, implying an about 19.6% increase potential. Pepsi returned -3.5% in the last twelve months. Debts, assets, and yields are all right. P/S is 1.6, and debt-to equity ratio is 0.9, both of which are slightly better than their industry averages. However, given its past record, I believe that Coca Cola is a better buy.
Founded in 1985, National Beverage sells and distributes various beverage products in the U.S. The Florida-based company, as of the Sep 2 close, was trading at a P/E ratio of 18.2, and a forward P/E ratio of 17.2. Estimated annual EPS growth for the next five years is 6.00%. It has no dividend policy, while the profit margin was 6.8% last year.
The company is trading 5.66% lower than its 52-week high, while it has an O-Metrix score of 1.69. Target price is $16.75, implying an about 6.9% increase potential. National Beverage returned 5.1% in the last twelve months, and it has zero debts since 2007. P/B is 9.0, crushed by the industry average of 4.1. Operating margin (10.5%) and profit margin are moderate red flags. Insiders own only 0.77% of the stock. Analysts give a 3.00 recommendation for the company (1=Buy, 5=Sell). I would choose more profitable stocks instead.
Embotelladora Andina recently announced its Q2 2011 results. It shows a trailing P/E ratio of 12.2, and a forward P/E ratio of 10.9, as of the Friday close. Five-year annualized EPS growth forecast is 10.7%. Profit margin in 2010 was 10.9%, while it offered a 1.51% dividend.
O-Metrix score of the company is 5.13. Target price indicates a 14.4% upside potential, whereas it is currently trading 8.43% lower than its 52-week high. Debts are going down for the last five years, while assets are increasing. The company returned 0.7% in the last twelve months. Debt-to equity ratio is 0.0, far better than the industry average of 1.1. 1 out of 5 analysts recommends buying, while three recommend holding. The company is relatively poor in terms of gross- operating margins, and ROA. Moreover, earnings decreased by 14.58% this quarter. There are better stocks to pick. However, holding is OK.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
