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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.

KO

3.62

Buy After Pullback

Hansen Natural Corp.

HANS

2.74

Avoid

Dr Pepper Snapple Group

DPS

3.91

Hold

PepsiCo Inc.

PEP

3.64

Buy, but alternative is better

National Beverage Corp.

FIZZ

1.69

Avoid

Embotelladora Andina

AKO.A

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.

Source: 6 Beverage Stock Picks By Cramer's TheStreet.com