The rivalry between the two iconic soft drinks manufacturers Coca-Cola $KO (+1.08%)
and PepsiCo $PEP (+0.03%)
has been going on for decades. Of course, it's not just about who has the tastier drinks in their portfolio, especially the best cola, but also about whose share has delivered the better performance.
Here, the point currently goes very clearly to Coca-Cola, a stock that has long been held in high esteem by investor legend Warren Buffett: the share currently offers the better performance at all time levels. Only in comparison with 30 years ago does PepsiCo have the edge over Coca-Cola (+916%) with a total return of 1,023%, taking into account ups and downs.
The underperformance is mainly due to a weak share price development in the past quarters. In the last year alone, PepsiCo has lost a quarter of its value (taking the dividend into account). The reasons for this are a dip in growth, falling margins and, from the perspective of at least some investors, a dilution of the product portfolio: PepsiCo has recently sought to strengthen itself primarily through investments and acquisitions, including Celsius and Poppi, while arch-rival Coca-Cola has continued to focus on its core markets. The recent rise in yields on US government bonds has created additional headwinds: the company's dividend has come into competition with the high interest rate on bonds.
In view of the two-year downturn, the dividend yield now stands at 4.4%, while the company's valuation has fallen well below the historical average. This has attracted both dividend hunters and value-oriented investors who believe there is a chance of a turnaround. Although at first glance the chart does not invite investors to buy the share, there are glimmers of hope that could provide an anti-cyclical entry opportunity.
PepsiCo chart signals
Overarching downward trend:
After reaching an all-time high of USD 196.88, PepsiCo shares are trading in a multi-year downtrend.
Trend acceleration: The stock has broken out of its downtrend channel to the downside and has recently accelerated its slide.
Series of sell signals: The technical weakness of the share is pronounced and at the same time there is a so-called death cross in the moving average.
Anti-cyclical entry opportunity: The support at USD 130 and the first bullish divergences are now raising hopes of a trend reversal.#cola
