SodaStream International Ltd (SODA): Is Brand Loyalty Dead?

Pepsi has also seen a similar trend. In 2006 24% of PepsiCo, Inc. (NYSE:PEP)’s revenue came from emerging and developing markets. In 2012 that number jumped to 35%. PepsiCo is currently the largest food and beverage company in Russia, India, and the Middle East.

Both PepsiCo, Inc. (NYSE:PEP) and The Coca-Cola Company (NYSE:KO) have a long history of growth, so any decline in brand loyalty in the developed world is unlikely to affect either of these companies significantly, however if sales do decline domestically they should more than be made up for by gains in emerging markets.

So with three companies looking to take advantage of changing consumer trends the only question left is deciding which one is the best value.

SodaStream appears the most expensive trading at 31.68 times earnings, with Coke and PepsiCo, Inc. (NYSE:PEP) following behind with a PE of around 21. Given SodaStream’s significantly higher growth rate, however, this high multiple is well deserved.

SodaStream is growing earnings annually by about 30% a year, whereas The Coca-Cola Company (NYSE:KO) and Pepsi have been growing in the single digits. Coca-Cola and PepsiCo, Inc. (NYSE:PEP) reward shareholders with both yearly dividends and frequent share buybacks. Sodastream International Ltd (NASDAQ:SODA) on the other hand is using its cash to fuel growth.

So which is the better buy?

It all comes down to which company can take greater advantage of changing consumer trends. With SodaStream’s incredible growth rate and untapped potential both in the U.S. and abroad it appears to be the winner of today’s Cola-Wars. While recent run-ups in stock price should make investors hesitant to purchase today it is an interesting opportunity that investors should look into, especially on any pullbacks.

Kyle Farrah owns shares of SodaStream. The Motley Fool recommends Coca-Cola, PepsiCo, and SodaStream. The Motley Fool owns shares of PepsiCo and SodaStream.

The article Is Brand Loyalty Dead? originally appeared on Fool.com.

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