NEW YORK ( TheStreet) -- Coke's a newer position that you have in the fund, and you like it because it's trading at a discount to its historical multiple. Why is that?
I think it's because 80 percent of their profits are tied to overseas and people are concerned about the growth rate slowing in overseas. I would argue that even if the markets are slowing, they are still growing above average rates relative to its peers and continue to gain market share. And the company is doing an outstanding job at executing. So the 8 percent discount to its historical multiple that you eluded to, I think is an opportunity to be buying.
This is a global stock, a global company, I mean -- where are they dispersed and how does it compare to some of their bigger competitors like Pepsi? Stephanie Link:
Well Pepsi's kind of a different animal because they have a big snack business and they're much smaller in beverages. The thing I look at when comparing the two, the North America business, which has been under a lot of pressure, with competition, lower prices...not really a price war, but very price competitive, very hard. And what I think has been interesting is you've seen really a divergence between Coke in North America and Pepsi in North America in terms of volume growth. Coke has been able to do 1, 2 percent kind of growth, nothing heroic, but Pepsi continues to see declines. So not only is Coke growing internationally because they have very limited competition there, but here in the states they're doing a very good job against their number one competitor. And I think that the fact that Pepsi trades in line with the historical average versus Coke is unjustified. Now I know the reason why, because people think they're going to break...Pepsi's going to break up the two pieces, the snack and the beverage business. Indra Nooyi (CEO of Pepsi) has been pretty adamant that she doesn't want to do it. So certainly, it would create shareholder value and it might very well happen down the road, but I don't think it's going to be something that's going to be real near term. Lindsey Bell:
Coke has been going through an operational restructuring. Is this a concern at all for the stock or do you view it as a positive? Stephanie Link:
I always think that restructuring is a positive, because it's an ongoing restructuring. They continue to look for ways to be more efficient, more productive, and really see the cost controls and extract them from the company and to see savings. And so as a result, when you see these kinds of things and the company continues to update and extend these productivity plans and these restructuring plans, it's kind of a buffer to earnings. Or another way to look at it is if the environment gets really much worse, they at least have a cushion to start with in terms of being more productive and being able to deliver on the earnings on the bottom line, which is the most important.