I'm increasing my position in $PEP (+0%) .
Despite being one of the worst performers in my portfolio (-14.8% total return), PepsiCo remains one of the investments I've held since almost the beginning (since May 2023).
I forsee some headwinds — such as political uncertainty (Trump’s presidency), the rise of weight loss drugs, and competition from distributor brands — but I still believe in PepsiCo’s long-term potential.
We're talking about a company with a long history of resilience, a remarkably low beta, consistent positive returns, and steady dividend growth and above all, they have a portfolio of incredibly strong brands. Even during challenging periods, such as temporarily losing a major European client like Carrefour, PepsiCo managed to keep its sales stable in 2024.
If consumers continue to buy PepsiCo’s iconic brands, the company will likely benefit from inflation-driven growth (like always), even without significant increases in product volume sales. Acording to Seeking Alpha's data, at the current valuation, the price-to-earnings (P/E) ratio is below its historical average (25 vs 21), and the dividend yield (3,74%) is higher than usual (under 3%) . Moreover, the valuation gap between PepsiCo and its peers has widened significantly — Coca-Cola is trading at a FW1 P/E of 22x, Procter & Gamble is at 21x while Pepsico is at 18x. PepsiCo’s growth rates, both in revenue and EBITDA, are in line with these peers, suggesting that this valuation gap could close over time.
I could be wrong, and a significant shift in consumer behavior may occur in the coming years. However, for now, I remain confident in my position. It also helps balancing my portfolio with a non tech or financial stock that pays dividend.
**This is not an investment advice, do your own research before buying anything"
