1. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP) is a global food and beverage company. Its products are consumed over one billion times daily in more than 200 countries. The company owns popular brands like Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, and Mountain Dew. The FLNA segment includes leading snack brands such as Lay’s, Doritos, Cheetos, and Ruffles in the U.S. and Canada.
In Q2 2024, PepsiCo, Inc. (NASDAQ:PEP) reported net revenues of $22.5 billion, an uptick of 0.8% YoY and 1.5% YTD. Frito-Lay North America saw a slight decline due to inflationary pressures, while Quaker Foods dropped 18% due to product recalls. However, PepsiCo Beverages North America gained 1%, driven by zero-sugar variants and new flavor extensions of Pepsi and Mountain Dew.
International organic revenue increased by 5.5%, with strong performance from the Europe and AMESA divisions. The company’s focus on local preferences and cost management boosted gross profit by 3.2% to $12.6 billion, with operating income up 10.6% to $4 billion. Adjusted EPS of $2.28 surpassed expectations.
PepsiCo, Inc. (NASDAQ:PEP)’s $6.4 billion in cash and equivalents and $8.2 billion planned returns to shareholders demonstrate solid financial health. Looking ahead, the company projects a 4% organic revenue growth for FY24 and an 8% increase in core EPS, underpinned by strategic cost-saving initiatives.
Notably, the company’s reliance on international growth raises questions about the sustainability of its growth in North America. PepsiCo, Inc. (NASDAQ:PEP)’s modest 1% gain in the beverages segment also highlights challenges, potentially impacting long-term growth if not addressed.
The company’s recent developments include expanding product offerings with smaller packaging for convenience, investing in zero-sugar beverages, and launching sustainable packaging options.
In terms of price movement, PEP saw an upsurge of 3.33% over the month and 4.61% YTD. PepsiCo’s strong international growth and disciplined cost management provide reasons to remain optimistic about the company’s future upside potential.
Analysts are optimistic about the stock, projecting an upside potential of 4.88%. As of Q2 2024, 65 hedge funds, with a combined investment of $4.3 billion, remained bullish on the stock, as per Insider Monkey’s database.
PEP is the Best Confectionery, Cookie, and Snack Stocks To Buy based on hedge fund sentiment. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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