The Coca-Cola Company (KO), PepsiCo, Inc. (PEP): Dr Pepper Snapple Group Inc. (DPS) Sees Expansion Differently

The campaign will be a small step toward improving the brand’s image, but Coca-Cola will need to make a greater effort towards improving sales of its Coke beverage. I believe the brand’s image is the reason for the stock to have continually hovered around the $40 mark for the past 14 years. The flagship Coke product is an international sensation, and with an improved image, Coca-Cola will be raking in additional profits.

PepsiCo’s price will increase with an expanding product line

PepsiCo has done a better job at increasing its product portfolio by expanding into the snack-food market. That will prove extremely valuable, as the company isn’t as controlled by cola revenue. With PepsiCo controlling about 64% of the salty snack-food market in the U.S., it has found a way to continually develop products that appeal to snackers.

The company is also expanding its product line globally. And with the stock trading at an all-time high, it looks like PepsiCo’s continued push to expand its salty foods and cold beverages into new markets is reflected in its share price (see chart below). However, its move into the Russian dairy market is not, and I consider the stock undervalued. The sheer size of the company’s $4 billion deal to acquire Wimm-Bill-Dann in 2011 tells me PepsiCo is confident about that new revenue source. And when PepsiCo shows confidence in a sector, it’s usually for good reason.

PepsiCo data by YCharts

Where these stocks stand

Dr. Pepper is definitely my top pick of the three, based on its proven ability to grow market share domestically. And a small increase in market share means big profits for the company and for shareholders. Coca-Cola will need to increase its efforts to improve the image of its Coke brand, as that product can be an even greater money generator due to its widespread appeal. PepsiCo is making major moves internationally and testing healthy market segments while it’s out there. It’s only a matter of time before its price justifies its growth savvy.

The article Dr Pepper Sees Expansion Differently originally appeared on Fool.com and is written by Phillip Woolgar.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PEP. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.