Should You Put a Little PEP in Your Portfolio?

With shares of Pepsico (NYSE:PEP) trading at around $75.48, is PEP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

PepsiDo you have any Pepsi products in your home? Please take a moment to check. You don’t need to check? You’re certain there are no Pepsi products in your home? You’re still sitting in your chair? Wow…you’re pretty confident. However, there’s also a very good chance that you’re wrong. If you have any of the following items, then you do in fact have Pepsi products in your home: Pepsi, Gatorade, Aquafina, 7UP, Mountain Dew, Sierra Mist, Cap’n Crunch, Quaker Oats, Tropicana, Fritos, Santitas, Lays, Ruffles, Doritos, Tostitos, Cheetos. And that’s not even the whole list! As you can see, Pepsi not only dominates the snack category, but it doesn’t do too poorly in the beverage department either.

Going forward, Pepsi will add healthy options, but that doesn’t mean it will abandon current products. Whatever continues to sell well will continue to be sold, and most of the products listed above sell well. That last sentence had a little potential for a tongue twister, didn’t it?

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

As far as the whole Pepsi vs. The Cola-Cola Company (NYSE:KO) argument goes, an official announcement of a winner is well past due. Here it is: both are winners! Case closed. You can’t argue it any other way.

Getting back to Pepsi, it’s currently trading at 19 times earnings, which is right at the industry average. It’s trading at 15 times forward earnings. Margins are solid, ROE is 28.70 percent, and operating cash flow is superb at $8.48 billion.

Let’s take a look at some more important numbers prior to forming an opinion on this stock…