3 Reasons to Buy PepsiCo Stock Like There’s No Tomorrow

PepsiCo (PEP -0.39%) It is one of those companies that has been very well run for a long time and investors tend to place a high value on it. When the stock drops to a fair price, maybe even a little below, you pounce on it. That’s point No. 3 on why you should buy PepsiCo right now like there’s no tomorrow. But let’s look at points 1 and 2 first.

1. PepsiCo does a lot of things very well

The brand bearing PepsiCo’s name has now fallen to 3rd place in the cola wars, behind Coca-Cola and Dr Pepper. It’s not a great look, but when you take a step back and consider PepsiCo’s full range of products beverage productsIt is currently the second largest beverage producer in the world. Some might argue that being #2 is not the same as being #1, and that’s true. But PepsiCo still has the size, distribution, marketing and innovation capabilities to be a very profitable business.

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Where PepsiCo really shines is in the salty snack category. The Frito-Lay division is the No. 1 player in the snacking space. Like beverage operations, it has the size, distribution, marketing and innovation skills to excel in business and profit. There’s also the Quaker Oats business, which is consumer packaged food products. While PepsiCo is just one of many major players in this industry, with its No. 2 position in beverages and No. 1 in salty snacks, it’s easily one of the most important partners for retailers from grocery stores to convenience stores. worldwide.

Investors generally prefer pure play companies such as: Coca Cola On diversified businesses that believe a single focus will lead to better business results. This may or may not be true. The other side of the argument is that a company with diverse business areas can withstand strong divisions, while others may face headwinds and therefore grow more reliably over time. PepsiCo’s diversification is a big reason why investors, especially more conservative types, love the stock.

2. PepsiCo has performed very well over time

There are many ways to look at the performance of a business. But for many investors, success is defined as paying a reliable dividend. Considering PepsiCo is an extremely elite company Dividend KingIt’s clearly a very successful company, with 52 consecutive annual dividend increases to its name. You can’t create a 50+ year streak of dividend increases without doing the right thing.

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When it comes to performance, you can also look to the consumer staples giant’s No. 1 position in salty snacks and No. 2 in beverages. There is no way for a company to maintain their industry-leading position if they do not perform at their peak, year after year. So, over the long term, PepsiCo has proven to be well run and the kind of company that investors can sleep well at night owning in their portfolios.

But even well-run companies go through difficult times, and this is the bottom line.

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3. PepsiCo looks attractively priced

Last year, PepsiCo’s shares lagged the previous year. S&P 500 using the index and the average consumer staples company Select Consumer Staples Sector SPDR ETF as an industry steward. This is because the company’s financial results are not as strong as investors would like and it lags behind key competitors such as Coca-Cola. Given PepsiCo’s long and successful history, it’s probably not worth getting too upset about short-term performance. Over time, the company is likely to get back on track.

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However, the stock’s slow performance has created an opportunity for long-term investors. Simply put, PepsiCo looks a little cheap right now. sale price, price-earnings, price-cash flowAnd price-book value All rates are below five-year averages. Approximately 3.2% dividend yieldMeanwhile, it’s toward the upper end of the stock’s historical return range. All of this points to a stock that looks relatively cheap, and that’s the final, and perhaps most important, reason to consider buying PepsiCo right now.

PepsiCo: Strike while the iron is hot

Big companies don’t go on sale very often. PepsiCo’s industry-leading businesses, long history of success (and rewarding investors through dividend increases), and valuation point to the opportunities investors have right here and now. If you’re thinking decades ahead rather than days ahead, now is the time to buy PepsiCo. Your future self will likely thank you if you do this.