10 Best Consumer Staples Stocks To Buy Now

6. PepsiCo, Inc. (NASDAQ:PEP)

Number of Hedge Fund Investors In Q1 2024: 62

PepsiCo, Inc. (NASDAQ:PEP) is also a dominant force in the global carbonated beverages market. Since both PepsiCo, Inc. (NASDAQ:PEP) and Coca-Cola operate in the same industry, their performance is also dependent on similar trends. PepsiCo, Inc. (NASDAQ:PEP) and Coca-Cola tend to do well during periods of moderate inflation as they can grow revenue by increasing prices and maintaining tight cost control to ensure that the percentage of price increases is higher than the internal cost increases. At the same time, PepsiCo, Inc. (NASDAQ:PEP) also has to ensure that a slew of new products help it maintain market share in the developed world, and gain market share in the competitive and untapped developing world. PepsiCo, Inc. (NASDAQ:PEP) shares have lost roughly 3% year to date as investors believe that since inflation has started to drop, it can not aggressively grow its revenue by increasing prices.

During its Q1 2024 earnings call, PepsiCo, Inc. (NASDAQ:PEP)’s management commented on its hopes for the developing world and how success in the developed world might translate into success in the region:

I think our team in Europe is doing a fantastic work. It started with strong productivity, simplifying the business and driving cost control, eliminating duplication and then reinvesting that money back into our brands and becoming more competitive and also driving our availability and driving our brand preference. And that is a flywheel that is working for us across both developing and developed markets in Europe. Obviously, developing markets a bit more. So if you think about Eastern Europe markets are growing a little bit faster than Western Europe markets. Western Europe markets have been impacted a little bit in this first quarter by some of the negotiations, and that’s not atypical in Europe.

But I think we have a good flywheel in Europe, and Europe will be expanding its portfolio along the lines of what the US has been doing, which will give us additional consumers and additional penetration in households across developed and developing markets. So we feel good about the flywheel in Europe. But at the center of that is a very strong productivity, cost discipline and reinvestment strategy that is, in a way, what we’re trying to do across the full company, elevating our productivity and driving their investments both into affordability, availability, a better brand equity and then investing back into our future, digitalization and sustainability at the center of that investment. So it’s a flywheel that we’re trying to do for all the world.