This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Here's Why Coca-Cola Is Better Than Pepsi

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?

Stephanie Link:
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.

Lindsey Bell:
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.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
KO $40.94 -0.05%
PEP $95.97 -0.48%
AAPL $130.54 0.20%
FB $80.29 1.39%
GOOG $533.99 0.35%

Markets

DOW 18,040.37 +29.69 0.16%
S&P 500 2,111.73 +4.34 0.21%
NASDAQ 5,082.9290 +12.9030 0.25%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs