Food and Beverage Sector Ideas

[gfp927z]

>>> PepsiCo (NASDAQ: PEP), Deere (NYSE: DE), and Chevron (NYSE: CVX) stand out as three dividend stocks that have been underperforming the S&P 500 but look like excellent buys now. Here's why.


https://finance.yahoo.com/news/high-hopes-3-dirt-cheap-121500958.html


Put some pep in the step of your passive-income stream

In her 12-year stint as PepsiCo CEO, Indra Nooyi helped improve its brand and grow profits. Since taking over as CEO in October 2018, Ramon Laguarta has done a good job navigating many unexpected challenges, including the U.S.-China trade war, the worst of the pandemic, inflation, and supply chain bottlenecks. Effective management is extremely important, since every percentage point in margin can mean hundreds of millions of dollars.

For Pepsi, growth usually comes from new product developments, strategic acquisitions, or efficiency improvements. Nooyi was instrumental in helping Pepsi acquire Quaker Oats and Gatorade. But arguably the biggest deal under Laguarta's tenure has been with the energy drink company Celsius (NASDAQ: CELH).

The company entered a partnership with the upstart beverage company in August 2022. It included a $550 million cash investment in exchange for convertible stock, an estimated 8.5% ownership in Celsius on a converted basis, and a 5% annual dividend. As with other consumer goods companies, Celsius shares have pulled back recently, but there's plenty of reason to think the deal will pay off over the long term.

Celsius also benefits from using PepsiCo's strategic distribution network. It is a complicated business -- arguably far more complicated than its peer, Coca-Cola -- because PepsiCo operates its own production facilities compared to Coke's royalty/franchise model. PepsiCo is also involved in far more product categories besides beverages, like snacks and breakfast items, whereas Coke focuses on what it does best: beverages.

Pepsi has a lower market capitalization than Coke but generates roughly double the revenue and half the operating margin. Due to its size and business model, it is a bit more vulnerable than Coke. However, the company's past management and current leadership have a track record of effective capital allocation.

Hovering around a 52-week low with a 3.3% yield, over 50 years of consecutive dividend raises, and a 24.5 price-to-earnings (P/E) ratio, PepsiCo stands out as an excellent stock to buy and hold for years to come.

<<<



---