PepsiCo (NYSE: PEP) recently reported its third-quarter earnings, with revenue up 13 percent over last year to $17.6 billion and core earnings up 7 percent. Investors are watching to see how effective price hikes will be in combating the inflation that’s been boosting supply costs and threatening profit margins. So far, so good, partly due to the company’s strong brand power.
Emerging markets continue to drive growth for PepsiCo, with snacks volume up 31 percent in China and 26 percent in India, and beverage volume up 19 percent in India and up by double-digits in many other regions. What’s less good is the company’s continued struggle with its core carbonated soft drinks, particularly in developed markets.
Current PepsiCo investors have plenty of reasons to stick around. There are challenges to be met, but the company has many very strong brands, and its push into more nutritional offerings is a promising sign of forward thinking from management.
Investors on the sidelines may want to look into PepsiCo. (The Motley Fool owns shares of PepsiCo, and its newsletter services have recommended shares of the company and options on it.)
Ask the Fool
Q: What can I read to learn more about financial planning? – C.G., Medford, Ore.
A: Try “Ernst & Young’s Personal Financial Planning Guide” (Wiley), which is available inexpensively, used, online. Also well regarded are “The Wall Street Journal Complete Personal Finance Guidebook” (Three Rivers Press, $15), Eric Tyson’s “Personal Finance for Dummies” (For Dummies, $22), and “The Motley Fool Personal Finance Workbook” by David and Tom Gardner (Touchstone, $16).
It’s great to educate yourself instead of handing over your money to someone else. Still, it can be smart to seek out a financial adviser sometimes, too. Learn how at www.napfa.org and www.sec.gov/investor/brokers.htm.
My dumbest investment
In 1975 I visited my brother in Oklahoma. All he and his wife talked about was Walmart: “You’ve gotta see this place!” (I lived in Pennsylvania, and Walmart hadn’t expanded there yet.)
We went to Walmart on a Thursday evening, and it was packed with shoppers. I said to myself, “As soon as I get home, I’m buying stock in this company.” Guess what? That’s right – I let the opportunity slip through my fingers. If I’d bought 100 shares then, they would be more than 50,000 shares today, and I would really be “retired.” – O.N., online
The Fool responds: Ouch! In mid-1975, shares of Wal-Mart traded at a price of $0.03 per share. (The price then was really $24.50, but adjusting for stock splits makes that $0.03.) With a stock price recently near $55 per share, your 51,200 shares would be worth $2.8 million, all from an investment of less than $3,000. Your story hurts, but it’s a great reminder of how we can profit in stocks. Much less spectacular stocks can serve us well, too, as can simple index funds.