PepsiCo (NYSE: PEP) , owner of Frito-Lay, Tropicana, Quaker, and Gatorade, has flown straight through the economic slowdown. The company grew earnings 15% in its fourth quarter ended December, marking its 13th consecutive quarter of 13% or better earnings growth.

For all of 2002, earnings rose 14% to $1.96 per share, or $3.5 billion, while sales increased about 5% to $25 billion. Synergies with recently purchased Quaker and gains at Frito-Lay improved profit margins, while return on invested capital (ROIC) rose 2 points to 28%.

For the year, volume on snacks, beverages, and Quaker products rose a very strong 8%, while Gatorade's volume soared 17%. The company is ahead of schedule in integrating the Quaker division. It saw $250 million in merger synergies this year, and expects $400 million in annual synergies by 2004.

The company also announced a management shuffle and the formation of a new division, PepsiCo International, to oversee food and beverage operations outside the United States and Canada. Pepsi is working toward its goal of being the No. 1 beverage company in the U.S. It just may have a chance.

Ineffective commercials continue to plague rival Coca-Cola(NYSE: KO). The latest tagline attached to drinking Coke is, "Feel... Real." (Well, sure, we didn't feel anything before, and we especially didn't feel real. We need Coke for that? Thanks.)

The ads target (as always) young people, and here's what the company had to say: "... It's about talking to them at a deeper level. No one's going to slam back a Coke in a way that seems forced or staged. They may slam back a Coke, but it has to feel real."

Wow. That's deep.

At $40 per share, Pepsi trades at 20 times trailing earnings and 18 times the 2003 estimate, which calls for $2.19 per share, or 12% growth. The company is valued at 22 times trailing free cash flow.

Jeff Fischer owns a few shares of both Coca-Cola and PepsiCo in dividend reinvestment plans.