5. PepsiCo (PEP)
Company Profile: Pepsi is a global food, snack and beverage company. Its brands include Pepsi, Mountain Dew, Tropicana, Gatorade, Lay's, Doritos and Lipton.Current Share Price: $69.92 (May 11) Potential Upside: 17% based on a price target of $82 Morgan Stanley's Take: Analyst Dara Mohsenian notes that Pepsi's stock underperformed in the second half of 2010, but adds that it's trading at a discount on a number of historical measures. Mohsenian says the multiple on Pepsi's stock should "continue to expand as investors become more comfortable with full-year [earnings-per-share] visibility." Pepsi currently has a forward price-to-earnings multiple of 14, a slight discount to the S&P 500 as well as rival Coca-Cola (KO).
4. Honeywell (HON) Company Profile: Honeywell is a conglomerate that makes security technologies, automotive products and chemicals. Current Share Price: $61.40 (May 11) Potential Upside: 22% based on a price target of $75 Morgan Stanley's Take: Analyst Scott Davis trumpets Honeywell's safety-products business, noting that personal protection equipment (PPE) is a $20 billion industry growing at twice the rate of gross domestic product. "The business is just 6% of Honeywell's overall sales but is growing fast," Davis writes. "With about 10% market share, Honeywell is the leader along with 3M (MMM), but the industry is still fragmented and could offer plenty of room for growth via acquisitions," Davis adds.
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