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Alright today on In Case You Miss It, we have a Pepsi versus Coke stock picking debate. But just real quick, the news, the first revenue for Pepsi came in line for the quarter. They beat on EPS. The stock was moving down just a little bit. We're going to bring in Kevin Curran our real money, our premium site reporter, Coke and Pepsi. I'm the Coke bull He's the Pepsi bull, what do you got from me on Pepsi?

Well, I think long term that Pepsi has a lot of levers to pull. First of all they have snacks that Coke doesn't have. They have, a number of successes in Frito-Lay in North America with exposure to Latin America, which is growing at 10% click. They also have a Bubbly, which I think was really an interesting part of the equation there and Soda Stream coming in, I'm a little bit less sold on Soda Stream. But with bubbly, Ramon Laguarta is the CEO says that could be a billion dollar opportunity and if that's going to be $1 billion opportunity and now snacks are 50% of the mix beverages growing at that type of clip, that would be a tremendous opportunity. And I think that we're seeing the market appreciate that because this Pepsi here is doubling up the returns in 2019 that Coke's got.

So you're the Pepsi man, I'm the Coke man, and I know that you're talking about Pepsi is killing it on acquisitions. Maybe not so much Coca-Cola. I know that they did the Costa coffee thing, but here's what I got from it. On Coca-Cola, they have the pricing power thing going on with the smaller packages which consumers like too. The EM emerging market trends look good. So the volume and the pricing is looking good for Coke. But here's what the real killer is. Revenue Growth for 2019 for Coke, we're looking at 9.4% moderates to 4.5% 2020 not bad. For consumer staples, a little bit above Pepsi, 4.6% sales growth in 2021 operating margin, Pepsi's at 16% 29% for coke, that's going to go up to 30% in 2020 and 31% in 2021 meanwhile, they're trading at the same multiple 22 times one year forward earnings. I liked the story from Coke and I would pick it up right now with the dividend yield at 3% above Pepsi's dividend yield, 2.9%.

I'll give you that and you're thinking about it like Warren Buffet and you and the old guys can stick with your coke. I appreciate the operating genius that they have there and the business model that they have, but I really think the Ramon Laguarta is helping expand into that millennial demographic with more focus on the packaging where they're thinking about millennials focus on plastic. Where coke is still putting out all these plastic products, soda stream, bring it into the home, direct to consumer. There's a lot of secular trends that they're playing into for the longterm that maybe might not be in the operating right now and you're looking at it quarter to quarter. But I think that Pepsi has a lot of levers to pull that Coke might not. And the one thing I'll give you is the Costa coffee. I'll give you that.

Yeah, you're talking about millennials...

Dr Pepper.

I don't know about y'all but I'm more of a Dr. Pepper girl myself.

I'll cheers to that.

She spoke to Jim Cramer. That's Katherine Ross, we have a Jim Cramer clip for you right now, why he didn't love Pepsi.

People talking about Bubbly being big, that's premature. I mean that's like not as big as I thought. I didn't like the way that Soda Stream hasn't really been effective in the United States.

And a little bit later on, I want you to look at Kevin's piece. Bubbly could factor into the equation for real. Jim Cramer doesn't love it.

He doesn't love it right now, but Ramona Laguarta said a billion dollars in the future, and if that comes to fruition, that's a big time opportunity.

Real money, our premium subscription site and stick with In Case You Missed It.

Sure, Pepsi (PEP - Get Report) and Coca-Cola (KO - Get Report) are usually neck-and-neck, but which one is really the better pick? 

Let's review the newest facts first. 

Pepsi's revenue for the second quarter narrowly beat expectations, coming in at $16.44 billion versus Wall Street's estimates of $16.42 billion. Earnings per share was $1.54, beating estimates of $1.50. The stock fell 0.57%. Analysts were cautiously optimistic. 

While there's reason for bullishness on Pepsi, the same is actually true for Cocoa-Cola. 

So, let's get to it... a soda square off, of sorts.

Pepsi Bull v. Coca-Cola Bull

Pepsi:

Kevin Curran, reporter for TheStreet's premium sister site RealMoney notes the following on Pepsi:

  • The launch of zero calorie Bubly and the acquisition of at-home soda-maker Soda Stream are still in their early stages of growth. financial results may not show themselves tomorrow, but they should show up in the long-run. 
  • Pepsi is also smartly capturing the millennial demographic by selling healthier snack and beverage products, as seen by the Bubly launch. Meanwhile, the company is selling smaller sized soda cans, which also allows for slightly higher pricing, which showed up in the sales results for the quarter. Pepsi could be a buy. 

Pepsi, by the way, was RealMoney's stock of the day.  Premium read here. Here's My Trade Idea for PepsiCo.

Coca-Cola

TheStreet's reporter Jacob Sonenshine (author of this very newsletter), notes the following on Coca-Cola:

  • Pricing power is also in the equation for Coca-Cola, which is also selling smaller sized soda cans. A Morgan Stanley analyst sees this as a tailwind. The beverage industry isn't exactly shrinking. 
  • Emerging market trends are stable for Coca-Cola. 
  • Coke's revenue growth for 2019 is expected to be 9.4%, far higher than a normal growth rate for a consumer staple. That rate will moderate to 4.6% in 2020 and 4.5% in 2021, compared to Pepsi's expected revenue growth rates of between 2% and 4%. 
  • Coke's 2019 operating margin will likely be around 29%, compared with Pepsi's 16%. Coke's margin is expected to rise to 31% by 2021. 
  • Here's the kicker: the two are valued at the same earnings multiple, with both forward one-year price-to-earnings ratio's of 22. Coke could be a buy. 

Related. Sparkling Bubly Sales Should Help Pepsi Stock Bubble Up

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