Stan WongPepsiCoPEPCOMMENTMar 14, 2013

Consumer products are facing pressure around the world. Don't sell just for tax reasons. Instead, ask yourself is the original thesis for why you wanted to own a stock still valid? If not, let it go. What you choose to buy instead is a separate decision.

We would be a bit agnostic on a name like PEP. It is large and stable and grows at mid-single digits but also trades at 20X forward earnings and should have tough comparable numbers over the next year, coming off of inflation pass through benefits. We think it would be fine for a 'steady eddie' type of name over the long term but also not something that excites us a whole lot.
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The valuation has always been too high, and its growth is slow.

It reports on Tuesday. The market is killing all food stocks, and PEP is saddled with the stigmna of producing junk food when obesity (given the new obesity drugs) is on people's minds. Shares have fallen lately, but he expects good earnings near-term. Sells at a not-cheap 21x PE and pays a 3.2% dividend, which is low verses the bond market. Without growth, shares will fall.

Great chart over 10+ years. Lower beta than the S&P 500. Leading global consumer powerhouse with a diverse portfolio of well-known brands. Stepping into healthier acquisitions.

Very strong balance sheet, robust cashflow, giving you a reliable dividend. More share buybacks to come. A name for reliable growth with income. Yield is 2.80%, expected to grow about 7%.

Valuations will limit their upside, now expensive, but it's a world-class brand with consistent earnings growth. A core holding.

A good company, an iconic brand, pays a good dividend and offers growth. It has diversified away from soft drinks in the last decade. Doesn't own it, because he prefers Pepsi for its exposure to salty snacks.

Continues to own shares. 
Pricing power remains strong (able to keep up with inflation).
Excellent operator under current CEO.
Good portfolio of assets - snack business also growing.

Has long owned this. Is finally seeing a pullback during positive momentum.

They have the drinks and the snacks businesses. Does well in recessions as people trade down from restaurants to snacks. PEP has done well in the past 5 years, but the PE is slightly high. He prefers Unilever in this space.

Leader in consumer staple business that is performing well.
Has out performed Coca-Cola since 2012.
Wide variety of consumers goods has seen continued growth.
26x P/E ratio making the shares expensive.
Would rather wait to buy shares at cheaper price.

They sell snacks and not just the drinks. Are raising prices as input prices decline. A tailwind will be the USD when it eventually weakens. Well-run company and defensive that you need in this market.