2. PepsiCo, Inc. (NASDAQ:PEP)
PepsiCo, Inc. (NASDAQ:PEP) was among Jim Cramer’s stock calls on Mad Money, as he highlighted the AI opportunities in neoclouds. Cramer highlighted the stock’s decline as a buying opportunity, as he said:
Or how about PepsiCo? Okay, last quarter, PepsiCo reported a fantastic set of numbers that sent the stock soaring. Now, in part because of this rotation, the stock’s been knocked down all the way back to right around where it was before it took off. Today, PepsiCo dropped nearly a buck, sinking to a level where it sports a dividend yield north of 4%. I think the rotation has given you a terrific place to start a position ahead of Thursday’s report. I am sure that CEO Ramón Laguarta simply cannot be satisfied with the stock that’s flat for the year. That’s not his style.
PepsiCo, Inc. (NASDAQ:PEP) produces, markets, and distributes beverages and convenient foods, including snacks, cereals, dairy, and ready-to-drink products. Cramer praised the company’s CEO during the April 16 episode. He commented:
This morning, PepsiCo’s Ramon Laguarta put on a clinic about how to grow earnings in a group that we’ve all, for the most part, given up on, consumer packaged goods… Let me walk you through the details here because I think it’s an important story. PepsiCo’s a complex company and doesn’t lend itself to easy analysis. There’s Frito-Lay, the snacking business. It’s the chief mover of the stock. Then there’s the beverages led by Pepsi, but also, of course, with the inclusion of Gatorade, which had a total facelift today. The company’s been challenged by a multitude of hardships… Some of these headwinds have dissipated. We’re seeing some behavior changes among people in GLP-1s…
The answer is smaller packages. That’s what Ramon figured out. A small… pack of chips with a good price is crushing it here. The price differential of a smaller bag has worked for more than just GLP-1 users. It seems like a great deal for consumers who are tired of inflation. Second, Ramon’s winning with innovation. The fast hydration system of Gatorade, faster to hydrate than water, was just introduced. I think it’s going to be a home run. There’s acquisitions like poppi, a more natural drink that’s doing quite well. The analysts seem a little clueless about these changes, though. Most are focused on how Ramon’s been able to control costs…. Having been through COVID, Ramon’s learned how to source from around the globe, and he is hedged on aluminum till the end of the year.
Plus, Pepsico’s scale allows them to crush on price the smaller players who can’t keep up with the sourcing, and they certainly aren’t hedged on aluminum till the end of the year. So Frito’s taken share, he’s confounding the analysts who are mostly focused on gross margins, not the bigger picture of PepsiCo’s business. They seem to be expecting the same shortfalls the other food companies gave them. Not with this one. What Ramon’s work shows is that you have to be inventive. You have to be willing to cut price, which he only did with the chips by the way, and you have to source from around the globe. Oh, and you need some luck, like the changing attitudes of consumers on the GLP-1s. That’s how you get a PepsiCo-style upsize surprise. At the end of the day, you should always look for wins wherever you can find them, whatever aisle they’re in. And there are plenty of wins outside of tech. The bank doesn’t asterisk that money; go make some of it.
