All I Wanted Was a Pepsi

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If you do more than consume salty snacks and carbonated bliss, you probably have good reason to be anxiously awaiting PepsiCo's (NYSE: PEP) third-quarter report later this week.

While shareholders usually buy into food companies for stability, Thursday morning's results have taken on deeper weight now that rival Coca-Cola (NYSE: KO) finds its shares trading at a 52-week low after reporting stagnant growth in case volume.

You probably know someone who bought into Coke as a dependable blue chip. What they may not know is that if Coca-Cola's stock meanders another 10% lower, it will be at levels last seen in 1995.

Pepsi hasn't had it so rough. Its stock has traded higher over the past year, and if you go back to 1995 you will see that Pepsi's shares have more than doubled since then. Yet the difference isn't due so much to Pepsi's superior financial performance as to the generous premium that investors were once willing to pay for Coke's stock.

What does that mean exactly?

Let me take you back to a Dueling Fools that pitted Coke against Pepsi back in 2001. In my argument in favor of Pepsi I broke down the 2000 financials of each company.

2000	Coca-Cola	PepsiCo
Revenues	$20.5 billion	$20.4 billion
Income	$2.2 billion	$2.2 billion
Free cash flow	$2.9 billion	$2.9 billion
Market cap	$110.5 billion	$62.4 billion

If you noticed the nearly identical results in the first three lines, the disparity in the fourth should have given any investor pause. The fact that Pepsi had grown sales by 12% that year while Coke had mustered a modest 2.8% uptick should have turned that pause into a rewind button.

While quality deserves a premium, that is never a license to procure a blank check. Consider a company such as General Electric (NYSE: GE), which is trading sharply lower today than it was four years ago despite possessing reasonable fundamentals.

But when it comes to the cola wars, there is something else working in Pepsi's favor. It is not just a soft drink specialist; its Frito-Lay arm rules in salty snacks. The company even had a significant stake in the fast food industry until it decided to spin off Yum! Brands (NYSE: YUM).

So don't let Coke's poor stock performance concern Pepsi shareholders. Just because one runs flat doesn't mean that the other isn't still packing some fizz.

Would you rather own shares of Coke or Pepsi? Is your answer in any way related to your cola preference? Will there ever be a return of Crystal Pepsi? All this and more -- in the PepsiCo discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz grew up a Pepsi kid, but his Coca-Cola wife changed his soda-swigging ways. He does not own shares in any of the companies mentioned in this story.