Possibly one of the biggest rivals in corporate America today, the battle between Coca-Cola (KO) and PepsiCo (PEP) continues to baffle not only consumers but also investors when it comes to determining which product is a better buy. While both companies have had recent trouble in emerging countries like India by having their products condemned for inappropriate ingredients, a shakeup like this could be necessary to promote future growth in possibly undervalued stocks.
In terms of fundamentals, Pepsi seems to have a slight edge. While Coca-Cola has the highest numbers, Pepsi has the best margins in terms of operating margins, revenue and profit, which is more important for growing companies. Pepsi has also, according to Yahoo Finance, been updated more times than Coca-Cola in recent months, indicating favorable sentiment among investment banks. In terms of guidance, both companies are looking to secure better procedures in emerging markets with their products, which should hurt profits for a while, but eventually boost them due to economies of scale. However, recently Pepsi has had positive and surprising EPS returns during its quarterly results. While Coca-Cola has also reported similar reports, the findings had a much smaller margin and barely affected stocks.
What is most important, when determining the choice between these actions, is the technical analysis involved. Over the past year, Coca-Cola has only hovered in a $ 5 range, showing small fluctuation patterns for speculators or investors. While this figure may be encouraging to fixed-income advocates, in reality, since 2000, Coca-Cola has barely fluctuated in its 20-point range, showing no signs of potential growth. While the situation is unfortunate, it appears that, like Microsoft, Coca-Cola has grown in terms of value to the maximum, and very soon diseconomies of scale may be apparent for this once-prosperous company, leading to stocks fall in the future. On the other hand, Pepsi has experienced continuous growth throughout its tenure in a consistent and pleasant growth pattern. While speculators may not be encouraged by the slow appreciation of stocks, long-term investors may favor this pattern, as the price of Pepsi does not appear to have peaked. The company is still in the prime of its career and should push stocks higher in both fundamentals and stocks for at least another decade. By investing now, investors have a chance to see Pepsi rise to around 80-100 points in 2010 and possibly even higher in 2015. While the wait may be more tedious than other penny stocks, the process will be relatively free. of stress, as investors will. be able to see how your capital gains appreciate over the years. This process is also favorable with your dividend payment which allows reinvestments to increase profits.
What I also like about Pepsi today is its recently appointed CEO with an Indian background, who may seem more favorable to emerging markets than Coca-Cola. Such a basic presence can add further pressure to Coca-Cola to spend more money on advertisements and other apparel to achieve a similar tone in these markets as its soda counterpart. While Coca-Cola is genuinely assumed to be the king of its industry, times are slowly turning for the worse for this tremendous corporation and it seems increasingly sympathetic to its hated rival at PepsiCo.