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How PepsiCo Can Finally Break Out to New Highs on Earnings

PepsiCo continues to find resistance in the $142 to $144 area. Will earnings be enough to propel the stock above this zone?

PepsiCo  (PEP) - Get PepsiCo Inc. Report has done well this week, jumping more than 3% as investors gear up for earnings.

The company will report its quarterly results on Thursday before the stock market opens. The stock has reclaimed and held several key levels this week.

However, PepsiCo is among the group of stocks that’s been unable to make new highs amid this run. While the S&P 500 has hit new highs, PepsiCo remains stubbornly below resistance.

On the plus side, it’s handily beating its biggest peer, Coca-Cola  (KO) - Get Coca-Cola Company (The) Report.

For the year, PepsiCo has risen 1%, besting Coca-Cola’s 11% decline. While the two have similar performances over the last six months, PepsiCo is just 6.2% off its highs vs. down 18% for Coca-Cola.

The stock's reaction was relatively muted to its last earnings beat, but bulls are hoping to get more of PepsiCo this time around. Can PepsiCo make new highs on earnings? 

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Daily chart of PepsiCo stock.

Daily chart of PepsiCo stock.

Earlier this month, PepsiCo stock cracked below the 200-day moving average as the market was under pressure.

For an entire week, shares chopped below this key moving average. On the plus side though, the stock continued to hold $130 as support.

On Friday, PepsiCo stock closed above the 200-day moving average. Then on Monday, shares gapped higher, reclaiming several key areas, including the 20-day and 50-day moving averages, as well as the 78.6% retracement.

The stock is now consolidating that gap-up move, with a tight three-day range playing out so far this week.

Should we get a bullish reaction out of PepsiCo, I would love to see the stock take out the $142 to $144 area. This zone has been resistance all year, first in February, then once again earlier this month.

A close above $144 could kickstart a long-await run toward $150-plus, with the 123.6% extension coming into play near $154.50.

On a bearish reaction, it would be promising to see the 200-day moving average and $134 area act as support. Should it fail, $130 support from last week is on the table. Below that and the $120s are on deck, with the June low in focus at $125.63.