Pepsi's Too Little, Too Late

Is Pepsi (PEP - commentary - Cramer's Take) like JoJo? This morning Pepsi sent me two boxes of healthy snacks -- as well as some delicious-but-really-bad Frito-Lay stuff -- and I wonder if this is Too Little, Too Late!

First let me say that Pepsi has been most impressive since I first raised the issue of whether it can weather an attack on fat. Right now, the fat that people are focused on is "trans fats." Let me add, though, as someone in the food business -- I'm a partner in snack food company Lesser Evil -- that the trans-fats question is not the focus. In fact, almost no one uses trans fats anymore, including Frito-Lay.

The real issue is obesity, and a major factor in that is the sheer grams of fat you consume, and Frito-Lay is the king of grams of fat. Its top products -- and not the special "Baked" versions -- get more than half their calories from fat. Read the nutrition labels for yourself on the Frito-Lay Web site!

Pepsi is quickly developing a whole line of low-fat products, as well as boosting brands like January acquisition Stacy's Pita Chip Company, which has a great name in all-natural snacks.

I just don't know if it will matter. The issue, remember, is that all that has to happen is for Frito-Lay to slow down -- and Pepsi loses its premium multiple.

Here's my take: At some point, a slowdown -- perceived or not -- will be factored into Pepsi's multiple. It's just not here. The company sells at twice its growth rate, which is my upper limit for what I'm willing to pay. Given that I believe Pepsi's growth will slow, you are going to see that stock sport an 18 multiple.

That would put the stock at $55.

Could happen. JoJo's right.

At the time of publication, Cramer had no positions in any of the stocks mentioned in this column.

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