A Closer Look at Yacktman’s Big Buys in the Fourth Quarter: Stryker Corporation (SYK), PepsiCo, Inc. (PEP)

Avon Products, Inc. (NYSE:AVP)

Yacktman increased its stake in Avon by 10 percent in the latest quarter bringing its total shares to 18.871 million which is equivalent to 1.62 percent of the firm’s portfolio. The firm has been holding on to its shares in Avon since it initiated the position in the third quarter of 2011.

Apparently, the fund manager is crossing its fingers on Avon to finally make the take-off that had been overdue for years. The company has been having problems due to problematic leadership and mistakes it had committed in emerging markets in the past. Now Avon has to overcome a multitude of challenges. It currently experiences dwindling profit margin; the third quarter net margin of 1.24% is way below that for the same quarter in 2011 at 5.94%. In addition, revenue has been going down for the third straight quarter. Nevertheless, estimates for its EPS growth next year is placed at over 22%. Based on consensus, this double-digit growth is expected until 2015. Its strength lies on its good cash flow. Investors may be having high hopes on the company’s new leadership as Avon has just appointed David Powell as its Senior Vice President of Business Transformation and Global Supply Chain.

PepsiCo, Inc. (NYSE:PEP)

The fund manager added 817,910 shares of Pepsico in its portfolio in the fourth quarter. This has brought the stake to over 23 million shares worth $1.574 billion. It is noted that the firm had sold some of its shares in the company during the two preceding quarters.

The growth prospect of Pepsico is encouraging. Its EPS growth for next year is estimated at 8.62%. So far, the company has been surpassing consensus estimates at least in all the past four quarters. Its annualized dividend amount has been also consistently increasing, albeit at a slower pace, in the last 3 years. With a profit margin on an upward trend, a healthy P/E ratio of 19.32, and an excellent dividend record, there is no wonder that Yacktman continues to invest billions of dollars in Pepsico.

In the overall, Yacktman had chosen a fair mix of big buys. In the mean time, I would prefer to wait before making huge moves concerning Avon until a momentum arises.

The article A Closer Look at Yacktman’s Big Buys in the Fourth Quarter originally appeared on Fool.com and is written by Aubrey Tabuga.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.