PepsiCo, Inc. (PEP): An Opportunity in Sodastream International Ltd (SODA)

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Part of that focus is because of the impressive profit margins in selling glorified water. Indeed, Coca-Cola’s profit margins are in the low 20s while PepsiCo, Inc. (NYSE:PEP)’s tend to be in the low teens. SodaStream, meanwhile, had a profit margin of just 10% in 2012.

Long-term buys?

Sodastream International Ltd (NASDAQ:SODA), as a stand alone company, is too risky for most investors. Momentum types might like the fad nature of the stock, but a keen eye will be needed to figure out when to jump ship. PepsiCo, Inc. (NYSE:PEP), meanwhile, is a great company with or without SodaStream.

It is important to keep in mind that PepsiCo is much more than just a drink company, however, because that gives it a leg up on The Coca-Cola Company (NYSE:KO) for those seeking diversification. Both recently yielded around 2.80% and have long histories of annual dividend increases. So, in many ways, that diversity is the biggest difference between the two. That said, investors seeking direct exposure to beverages would be better served with Coca-Cola.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, PepsiCo, and SodaStream. The Motley Fool owns shares of PepsiCo and SodaStream.

The article An Opportunity in Soda originally appeared on

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