Coca-Cola vs. peers
Coca-Cola possesses massive branding power, and PepsiCo, Inc. (NYSE:PEP) dominates the snack market. This might lead you to think there are large differences in fundamentals and performances, but that’s not the case. Both stocks have traded in tandem for decades, and both companies are currently trading at 21 times earnings while offering a 2.80% yield. Monster Beverage Corp (NASDAQ:MNST) is trading at 31 times earnings and doesn’t offer any yield. This makes Monster a high risk/high reward investment.
PepsiCo, Inc. (NYSE:PEP), which makes snacks as well as beverages, relies on brands like Gatorade, Aquafina, Tropicana, Doritos, Cheetos, Quaker, and Pepsi itself for top-line growth.
Monster might not be as diversified, but it has achieved cool status in the 18-35 age demographic, which can drive sales a long way.
It would be difficult to go wrong with Coca-Cola or Pepsi. Their product and global diversification are likely to lead to solid growth in strong economic environments, and resiliency in weak economic environments. Dividend payments will also help investors when economic times are difficult. If either stock depreciates significantly, investors can use that dip as an opportunity to cost-average down.
Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Monster Beverage, and PepsiCo (NYSE:PEP). The Motley Fool owns shares of Monster Beverage and PepsiCo. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Coca-Cola’s Branding Brilliance originally appeared on Fool.com is written by Dan Moskowitz.
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