PepsiCo, Coca-Cola, and SodaStream: 4 Stories to Watch

New products, regulatory hurdles, and the SodaStream correction can mean detriment and opportunity for their respective companies

Jan 19, 2014 at 7:00AM

Recent beverage industry headlines revealed some several interesting topics for PepsiCo (NYSE:PEP), Coca-Cola (NYSE:KO) and its bottler in Latin America Coca-Cola Femsa (NYSE:KOF), and home carbonation system company SodaStream (NASDAQ:SODA). Product introductions, government regulations, and holiday challenges made an impact on these companies.

Interesting products
If you live in Japan and enjoy Mountain Dew products, then you might enjoy Mountain Dew-flavored Cheetos. According to the newsletter Bakery and Snacks, PepsiCo plans a limited release of the soda-flavored/cheesy delight in Japan. This represents a sequel to the Pepsi-flavored Cheetos that also enjoyed a limited release in Japan back in August 2013.  This demonstrates PepsiCo's desire to work its beverage and snack portfolios in conjunction with one another and prove naysayers, such as activist investor Nelson Peltz, wrong for saying that PepsiCo needs to unload its beverage segment.  

In other PepsiCo news, the company released two new Mountain Dew Kickstart flavors on Jan. 13: black cherry and limeade. The press release emphasized real fruit ingredients and low-calorie content. It's only natural for PepsiCo to capitalize on stellar growth in Mountain Dew Kickstart; the drink represented a strength in PepsiCo's beverage portfolio in the most recent quarter, "on pace to achieve $100 million" in "annual rate sales of the United States," according to the company.

Aware of shifting consumer tastes toward healthier beverages, Coca-Cola released two new Minute Maid Juices To Go products. Both of these new products contain vegetable and fruit juices such as purple carrot, pumpkin, beet, and pear. In the Coca-Cola press release highlighting the product release, Charles Torrey, Vice President of Minute Maid Marketing, said, "Our goal is to keep our fans refreshed with great taste and good nutrition and we are excited to offer them more options from our Minute Maid Juices To Go product line," serving as indication of Coca-Cola's desire to serve the consumer who doesn't want soda on the go.

Regulatory impact
Governments that worry about the impact of obese citizens on health care infrastructure want to clamp down on sodas and other snacks perceived as unhealthy. Mexico, which struggles with some of the highest obesity rates in the world, enacted an excise tax of one peso on every liter on Jan. 1 affecting Coca-Cola bottlers such as Coca-Cola Femsa. This lessened the enthusiasm of stock market analysts for the bottler and its stock, according to a blog on Barron's website. Barclays lowered its price target from $140 to $132 and anticipates a decrease of year over year volume of 5%. 

SodaStream in trouble?
The huge 25% drop in SodaStream's stock price on Jan. 13 represented another eye-catcher as the company released preliminary results that fell below everyone's expectations. High expectations can be built into a company's stock price, and when those expectations aren't met, you can expect a correction and an opportunity to pick up stocks of companies on the cheap. As fellow Fools Mark Reeth and Sean O' Reilly recently reported, SodaStream said its revenue of $562 million will fall short of the expected $564.3 million, and that its anticipated net income of $52.5 million won't meet the target of $63 million.

Foolish takeaway
PepsiCo's success will depend on the integration of its beverage and snack portfolio and possible resulting hybrids. Both Coca-Cola and PepsiCo understand the concept of "innovate or die," as evidenced by the new Minute Maid and Mountain Dew products. Bottlers such as Coca-Cola Femsa will also need innovation to overcome increased regulation and scrutiny by governments. However, an anticipated improvement in the Latin American economy should bode well for this company despite the new red tape. As for SodaStream's correction, the company now trades at a mere 17 times earnings as of this writing. Its new estimate of $52.5 million in net income still translates into year-over-year growth of 20%. All of these companies deserve more of your research time and a place on your Motley Fool Watchlist.

3 stocks well worth watching
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Fool contributor William Bias owns shares of Coca-Cola. The Motley Fool recommends Coca-Cola, PepsiCo, and SodaStream. The Motley Fool owns shares of Coca-Cola, PepsiCo, and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information