PepsiCo (PEP) has traditionally maintained a wide competitive moat in the industry by reporting steady gains and gradual market expansion over the years. Pepsi has a strong and sustainable organizational and financial structure, which has largely allowed the company to perform well, even in adverse market conditions. Moreover, the stock has a diversified product portfolio that has helped it to adapt to changing global trends and consumer preferences. As a result, Pepsi has been able to expand its share in the global market.
Even during the global economic and financial crisis, Pepsi managed to stay ahead of its competitors with an above average financial performance. Even currently, the company's performance in the stock market strongly suggests that it is a popular stock investment option; investors have seen a lot of promise in the high yield and handsome earnings that the stock offers. Moreover, the company seems strongly poised to achieve greater stability while continuing its drive to improve its financial structure.
It is evident that PepsiCo has done well to devise a sustainable business model that has largely ensured the stock's continued upward drive. Although there are critics who cite that the company's diversification is impaired by a range of factors, the best aspect about Pepsi's strategy is that it has focused more on achieving greater stability and in widening its competitive moat rather than aggressively pursuing expansion of global market share.
This approach has earned Pepsi favorable market sentiment recently while the stock has also drawn positive investors because of its high earnings and impressive dividend yield. Looking at the leading financial indicators of the business, I strongly believe that the stock is a good investment option at the moment.
Coca-Cola (KO) can be called the traditional rival of Pepsi, as it dominates the international beverage industry and has operations comprehensively spread across the globe. The company has a highly diversified product portfolio that is specifically designed to cater to the needs and preferences of large market niches. Coca-Cola has a massive market capitalization of nearly $170 billion, with an average trading volume almost touching 8 million. The stock has a price to earnings ratio of 19.90, which is exceptional when compared with industry standards.
Coca-Cola has also maintained a healthy dividend history with a yield of 2.7% and a dividend rate of $0.51 on earnings per share of $3.79. This has earned the stock favorable investor sentiment in recent months. As a result, Pepsi and Coca-Cola are at loggerheads again for a greater share of the global market. Therefore, while I agree that the stock has the capacity to consistently offer significant yields to investors in the current financial year, increasing competition from Pepsi and weaker than expected financial results and declining market share in Europe will limit Coca Cola's growth this year.
Although Dr Pepper Snapple (DPS) is a direct competitor for PepsiCo, the company has largely failed to report impressive gains and significant growth in the current financial year. The company is uncomfortably small when set against the likes of giants like Pepsi and Coca-Cola. Although Dr. Pepper's beverage products are usually popular within United States, the company has betrayed a strong urge to strengthen its presence in international markets.
As a stock, Dr. Pepper is not a very popular investment option among investors seeking high yields and returns on investment. Although it has offered steady returns and earnings to stockholders, it significantly lags behind in terms of capital and sales volume. Dr Pepper can only be valued in terms of relativity to its competitors and peers in the industry. Even then, a small group of investors have maintained an interest in the stock, perhaps because of its diversified product portfolio and for its tendency to consistently offer steady dividends. However, from the point of view of a stock investor, I strongly believe that Pepsi is a safer and more viable investment option, especially looking at its performance so far in the current financial year.
Kraft Foods (KFT) has evolved with time and has successfully adapted to the changes in market trends and consumer preferences in order to widen its competitive moat. Its performance in the stock market has been as impressive. Investors have largely maintained an interest in the stock because of its high potential for future growth, high yields and impressive earnings. The stock's financial structure is currently quite stable, and leading industry experts speculate that Kraft has the capacity to grow by as much as 30% year-on-year.
With such an impressive outlook, I believe that this stock is strongly poised for growth and will give tough competition to Pepsi. However, PepsiCo would be the best choice to invest in right now, as it offers high returns on investment and is a very stable stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.