The battle between Coke and Pepsi seemingly never ends. No matter the advertising dollars, the celebrities or the taste tests, in the end, everyone still has their brand of choice. It comes down to a matter of taste to many. However, for the few that are unsure, there’s a new way to decide: stocks. Which one is the better company from a stock market point of view?
Stock analysts seem to favor the tried and true standard, Coca-Cola. The company announced its fourth-quarter profit today. The news was good with a 55% rise report. In fact, revenue rose to $7.51 billion from $7.13 billion. The news brought in a Buy recommendation from Wall Str. Analyst David Silver.
This a change from J.P. Morgan’s downgrade last month. The company downgraded Coca-Cola from neutral to overweight. This was due to J.P. Morgan’s fears that the recession had hit the company hard especially in developed markets.
The rise in profits in the fourth quarter is largely due to Coke’s foreign and developing markets such as China and India. The company’s sales in India actually rose by 20%, and in China there was a 29% rise. Coca-Cola is spending its money building infrastructure and delivery systems in those countries.
What does this mean for rival PepsiCo? PepsiCo is due to report earnings as well later this week. However, buy beware: the stock is not expected to perform as well due to a less than profitable quarter. The recession has meant far fewer sales. Furthermore, PepsiCo’s focus on other commodities such as its snack side (they sell everything from chips to oatmeal) also contributes to a net loss. Snacks are actually 60% or Pepsi’s business.
Coca-Cola, on the other hand has focused on expanding international business of its soft drink. This effort has given Coke the lead outside of the United States.
Still, both are strong stocks. Coke (KO) is currently a $50+ stock and David Silver projects it to reach $65 within the next 12 months. PepsiCo. (PEP) is currently almost a $60 stock.
In the long run, the Coke vs. Pepsi saga will continue. Both brands have sizeable holdings and have no intention of disappearing. For investors, the brand that seems to have Wall St. on its side is Coca-Cola. Fortunately, Wall St. doesn’t operate on taste. Investors can still drink Pepsi while investing in Coke.
Written by Lani Shadduck
HULIQ.com
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