PEP

"companies like Walmart, companies like Costco, McDonald's, a lot of TJ Maxx, a lot of the apparels, LVMH, Lululemon, Nike, Uber, even PepsiCo, and and even Waste Management is being affected by diesel prices and all those companies. Anything that has to do with the consumer is trading near its 52- week close."

"I get the same question for Pepsi and Coke. I get the same question for waste management."

"Pepsi acquired this brand. If I recall, it was back in about 2020. They didn't do a dang thing with the brand. If anything, they probably lost market share. It just, you know, you know, soda companies run energy drink energy drink brands. It just doesn't work, right?"

"the PepsiCo, but those companies, especially BHP, doing really good for me"

"For example, Coca-Cola, Pepsi, McDonald's, Proctor and Gamble, your typical defensive um low growth type stocks that pay dividends. These stocks are all selling for well over 20 times earnings."

"That means Pepsi's going to cut the dividend. But they ignored what's called net working capital. Pepsi's net working capital in 2025, which are non you could say recording expenses, they're more of timing related inventory expenses and other expenses, it waited on revenues or on free cash flow by about 1.8 billion dollars."

"People love Pepsi, they're going to pay a little bit more for Pepsi, and Pepsi's pricing power has shown a lot of strength, and it hasn't eroded pretty much since 2022. So, I think the stock's undervalued. I like the company for the long term. That's my opinion on Pepsi."

"So, they've been switching away to different things and people are drinking less and less soda, which has led to a structural decline in volumes for Pepsi. And volumes have been declining 1 to 2% on a quarterly basis since the end of 2022."

"Many of you have asked me for an update on Pepsi. Pepsi is a stock that I used to talk about a lot on YouTube. I've been in and out of the stock for many, many years. It's one of my favorite boring companies in the market."

"This is a massive massive improvement as Pepsi has been shifting away more towards, you could say, more drinking products and healthier food in general and they're seeing some benefits of it. For the first time ever, they posted a positive quarter in terms of organic growth and they still raised prices."

"So the company can pay the dividend and they can have 3 billion dollars left in free cash flow for the company to do dividends or to do buybacks or to potentially do acquisitions or to even pay down the debt. So I don't think the Pepsi dividend will be cut anytime soon."

"But, Pepsi's dividend is pretty amazing. They have grown the dividend at a 7% CAGR since 2010. They've been paying it for 54 years. I don't think the dividend will be cut anytime soon."

"I think there's a massive misunderstanding by a lot of people. They analyze Pepsi on X and they're saying that Pepsi's going to cut the dividend because the free cash flow is not enough to cover the dividend."

"So adjusting for the net working capital, Pepsi would have posted more than 9 billion dollars in free cash flow against 7.6 billion dollars in dividend."

"So, I'm looking into the stock again and I'm going to talk about it and I hope you enjoy it as always. Now, Pepsi needs no introduction. They own a lot of popular brands such as Pepsi, such as Gatorade, Mountain Dew, Lipton iced tea, and other kind of Lipton products, the Bubly sparkling water, those ready-to-drink beverages of Starbucks."

"Those are owned partially by Pepsi. They also have a lot of snacks, which is where they're getting hit badly by GLP-1s. You know, people are not consuming as much Lay's chips and Doritos and Cheetos."

"I see good risk reward setup on Pepsi. I think Pepsi is being hated on X because people say GLP-1 and all these things, but Pepsi is experiencing positive volumes for the first time ever."

"And that's really really good for Pepsi in general. Again, they've been diversifying. Now, they have a stake in Celsius and Celsius acquired Alani Nu."

"Then lately they've been raising them 3 to 4% while volumes have been declining between 1 and 1/2 to 2%. So, they can still raise prices above the decline. Now, so for the first time since 2022, this quarter Pepsi has actually experienced a positive quarter in volume. They were able to grow volumes 1% and they still raised prices about 2%."

"So I I think the stock's going to zero and I don't think the dividend yield is going to zero. I think the dividend will be sustainable. So, here you're getting about 6% in earnings per share growth, about a 4% dividend. This is about a 10% shareholder's yield, 10% annual return from Pepsi in terms of earnings per share and the dividend."

"Now, most people buy Pepsi for the dividend. The dividend right now it's one of its highest ever at a 4.1% starting yield. You wouldn't dream of getting a 4% starting yield on Pepsi for the last 5 or even 10 years."

"But, they still have a lot of exposure in water and a lot of the drinks and their drinking business has been doing very, very well in coffee and many other things. Now, Pepsi has been suffering from a structural decline in soda consumption in terms of volumes because people are consuming less and less soda."

"We discussed Pepsi, things like that, and the competition is extremely fierce."

"Next company, we have Pepsi. We discussed it in a recent video."

"Over 80% of the stocks in VGT focus on hardware, semiconductors, system software, and applications while skipping companies like Walmart, Pepsi, and even the trillion dollar IPOs since they're not classified as information technology companies to begin with."

"First, it holds stocks that don't fit the AI theme at all, like Walmart, Costco, T-Mobile, and Pepsi."

"Pepsi, and now let's do Alibaba."

"First and foremost, I have to say that Pepsi is not the business it was in the '90s, 2000s, and 2010s."

"A comment that I often get is, "Sven, what do you think about Pepsi?" Then I look at the business, people are attracted, dividend yield 4%, P/E ratio 22, Pepsi strong brand. Is it a buy?"

"Therefore, Pepsico, if I would look at our table, I would put it here. So, the reward is low. The risk is relatively high compared to others. Therefore, it's not an investment that I would say, "Oh, wow, this is it.""

"There you go. It is close to the stock price, and you can expect a 9% return from Pepsi going forward."