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TheStreet Open House

Tim Brown: Dr. Pepper Snapple Has Pop

Stock quotes in this article: dps

Last season the New England Patriots went on an amazing run, staying undefeated in the regular season -- 16-0 -- and they continued their dominance throughout the playoffs. That is, until the Super Bowl, when the big-time underdog New York Giants upset the Pats.

It's an amazing accomplishment and not one to be taken lightly. In fact, the last team to go undefeated the entire season, including the Super Bowl, was the 1972 Miami Dolphins. The season was shorter back then, but the feat still unbelievable.

Every season it seems there is a team that makes a remarkable run and threatens to have a perfect season. The Indianapolis Colts came close a few years back, winning their first 13 games before falling to the San Diego Chargers in Week 15. The last team prior to that to get off to such a hot start was the 1998 Denver Broncos, who also lost their 14th game of the season.

When the streak is broken, ESPN features players from that '72 Dolphins team and Chris Berman delivers his annual speech about champagne corks popping somewhere as the Dolphins alum celebrate the preservation of their record.

This season the league has its collective eyes on the Tennessee Titans. The team is off to an unlikely 10-0 start, having outscored opponents 244-131. That works out to an average margin of victory of more than 11 points. That's pretty impressive for a team that has surprised most observers, especially considering the Titans play in the same division as the Indianapolis Colts. Throw into the mix that their Opening Day starting quarterback, Vince Young, was injured early this season and has had other negative media reports about his mental state. They had some significant hurdles to overcome.

The team has just won. However, Tennessee has a long road ahead to break history. On the plus side, the Titans play the league-worst Detroit Lions (0-10), last-place division rival Houston Texans (3-7) and the Cleveland Browns (4-6). However, their last game of the season is against the division rival Colts (6-4), who may be fighting for a playoff spot.

They will also face AFC North leader Pittsburgh Steelers (7-3) and the AFC East leader New York Jets (7-3). They do face the Jets at home this week, but the Jets are coming off a longer-than-usual week of preparation. The Jets beat the Patriots in overtime in a Thursday night game and have an extra three days of rest for the Titans.

Undefeated teams are a two-sided coin. On the one hand, they are performing great, no one is better. However, the only place to go from there is down. It's really difficult to go undefeated and there are so many traps that teams can fall into. Opponents are gunning for them just a little bit harder and now they have a target on their backs. They can lose key players to injuries or overlook an opponent and poof, it's all gone.

Unless they win the Super Bowl, and once they fall from that plateau, their season is looked at in a different light than when they were invincible. If they were a stock, it would be time to sell. Yes, they may have a little room to go higher -- they may win the Super Bowl -- but chances are that they will lose and their value (record) will fall.

These are great teams that have accomplished a lot, but if you are looking for a team with upside, you are better off choosing a winning team that has had success but has room to improve its winning percentage. The AFC West-leading Denver Broncos (6-4) or Washington Redskins (6-4), or even the Colts might be a better proposition if they were stocks that you could invest in.

With that in mind, let's take a look at my pick for today: Dr. Pepper Snapple Group (DPS). The company engages in owning, bottling and distributing nonalcoholic beverages in North America. It makes soft drinks, teas, juices and mixers. Its brands include Dr. Pepper, 7UP, Sunkist, A&W, Canada Dry, Schweppes, Squirt, Penafiel, Snapple, Mott's, Hawaiian Punch, Clamato, Mr. & Mrs. T, Margaritaville, and Rose's. Dr Pepper Snapple Group started operating independently of Cadbury as of May 6.

The stock is trading at a new low. It recently was trading at $16.83.

The company is doing well, despite a difficult environment. Its efforts to tighten up efficiency have worked so far, and it has a number of unique-flavored drinks in the marketplace. Because it does not have a trading history, it can be difficult to assess its true value, especially in this environment. However, Cadbury and some of its competition have traded in a range of 10 to 26 or 27.

The company's forward price-to-earnings ratio is just 9.40, which tells me the marketplace doesn't have the confidence in this stock that I do. It has a return on equity of 10.74%. It also has revenue of $5.77 billion. The institutional support on this company is very solid at more than 83%.

In short, this company is a winner with a lot of upside.

Keep moving the chains!

At the time of publication, Brown had no positions in stocks mentioned, although positions may change at any time.

Tim Brown played 16 seasons in the NFL, where he made nine Pro Bowls. After a brief stint with the Tampa Bay Buccaneers in 2004, Brown retired as an Oakland Raider. He was a Heisman Trophy winner in college for Notre Dame.

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