PepsiCo Has Potential in a World Weary of Inflation
PepsiCo Inc. (NASDAQ:PEP) is one of the world's leading brands, yet it stays relatively untouched by the effects of economic headwinds like inflation and global conflicts. However, the company needs to stay on its toes to account for higher freight costs and a slowing economy.
As one of the most successful companies in the world, its shares remain stable and the company regularly pays out dividends and buys back shares. Because of this, it could be a good long-term investment that can be depended on to provide stable returns.
PepsiCo is built to resist volatility
PepsiCo has built an ideal business model that can do well in any environment. It is a diversified food and beverage company with products ranging from soft drinks to snacks, including the Pepsi, Lay's, Doritos, Quaker Oats, 7Up, Tropicana, Gatorade and Aquafina brands.
With a strong presence in both developed and emerging markets, the company's product mix is well-suited to the changing tastes of consumers worldwide. And Pepsi's efficient distribution system allows it to reach consumers in both rural and urban areas. It is also consistently innovating its products and marketing to keep up with the latest trends. As a result, the company is well-positioned to continue growing in the years ahead.
It is also constantly expanding. For example, PepsiCo inked an agreement recently to purchase a 20% stake in French bottled spring water brand AQUA Carpatica. The company will distribute the water in Poland and Romania and will have the option to expand in other regions, including the U.S.
According to data from Statista, sales will continue to grow at a compound annual rate of 6.95% from 2022 to 2026 in the soft drink market, which includes carbonated drinks, energy and sports drinks and non-carbonated drinks. PepsiCo is a major player in all three areas, so it should benefit from the growth.
The company posted excellent numbers in 2020 and 2021, showing that Covid-19 had little impact on its performance. One can expect the company to further grow its sales in the coming years, especially with data supporting industry growth and the pandemic largely behind us.
PepsiCo is widely considered a stable investment as it is built to resist volatility and does well during inflationary periods. The company's ability to weather economic storms has been one of the key factors in its consistent growth over the years. The company has a strong presence in both mature and emerging markets, which helps to insulate it from regional economic problems. In addition, it manufactures a wide range of products, giving it diversified revenue streams that help offset any potential losses. As a result, it has a reputation for being a safe investment for both individuals and institutions.
Pepsi completed a huge milestone this year
Coca-Cola Co. (NYSE:KO) and Pepsi are some of the most iconic brands in the world. The two soft drink manufacturers have been trying to outdo each other for decades and are constantly fighting for market share. This rivalry often spills into the investment world as analysts and investors debate which is the better brand for their portfolio. Both Coca-Cola and Pepsi have a strong track record of delivering shareholder value. Coca-Cola is a diversified company with a presence in multiple categories, including bottled water, juices and coffee. On the other hand, Pepsi has focused its efforts on the snack food industry.
During the pandemic, Pepsi swept past Coca-Cola and became more of an investor's favorite because it was able to weather the effects of the pandemic better. This was largely thanks to its snack division, which helped the company continue to make money even during this tough time.
However, when judging Coca-Cola and Pepsi, there was one area where the former had a leg up on the latter: Coca-Cola is a dividend king. However, Pepsi became a dividend king this year, which means they are part of an elite group of public companies that have continually increased their shareholder dividends for at least the past 50 years.
This track record of consistent dividend growth makes PepsiCo an appealing choice during market volatility when dividend payments can provide a much-needed source of stability.
Takeaway
PepsiCo is a world-renowned food and beverage company that offers many popular items. It also has a strong track record of profitability and shareholder returns.
The company has performed well even during tough times and is poised to continue its success. It is a quality company with a strong brand that has delivered high shareholder value in the past. Plus, shares are affordable right now, too.
This article first appeared on GuruFocus.
