For immediate release
Chicago, IL – January 6, 2022 – Today Zacks Investment Ideas presents: PepsiCo, Inc. PEP, The Coca-Cola Co. KO and Keurig Dr. Pepper, Inc. KDP
Consumer staples could herald what lies ahead in 2022
Price action in the stock market has been fast and furious as investors position their portfolios for the New Year. Sector rotation has been fully flaunted, with institutions relinquishing the names of growth and technology and shifting to more defensive positions. Below we can see the performance of the S&P sector over the past month.
After falling behind for most of 2021, the consumer staples sector is leading the pack during this time, reaching new all-time highs. New heights are a sign of strength; many staples have completed large bases and are climbing into new terrain with above average volume which is another sign that this save move may have more room to function.
The Consumer Staples ETF SPDR (XLP) has recently shown resilience and has grown by almost 20% in the past year. XLP outperformed last month and shows no signs of spiking movement. We’re going to explore three XLP components that are also reaching all-time highs.
While recent performance is positive for commodities, it’s important to note that leading defensive sectors could potentially be a warning sign. Most investors expect the growth names that were beaten last year to rebound in 2022, but as we know, the crowds are usually wrong.
Trends can persist much longer than most investors would expect. When commodities and utilities innovated in the past while technology lagged behind, history has shown that increased volatility could be in store in the months to come. Earlier non-recessionary periods in which the S&P 500 posted negative returns tended to coincide with outperformance of the defensive sector.
At this point, that line of thinking is something to watch out for rather than considering a complete portfolio overhaul. Volatility is still relatively moderate after peaking at the end of November. As investors, we want to maintain maximum flexibility and adjust our game plan if necessary. Rather than triggering a knee-jerk reaction, it’s important to keep an open mind to the multiple potential outcomes.
Let’s dive deeper into three well-established staples that each reach new historic highs.
PepsiCo is engaged in the manufacture, marketing and distribution of snack foods, beverages and related grain-based products. The company’s food and beverage portfolio includes well-known brands such as Frito-Lay, Pepsi-Cola, Gatorade, Quaker and Tropicana. PepsiCo serves a variety of distributors, grocery and drug stores, big box stores, member stores and online retailers through a network of drop-in, warehouse and e-commerce platforms. PEP was founded in 1898 and is headquartered in Purchase, NY.
PEP has had a notable history of profit beating, beating estimates every quarter for the past five consecutive years. The company has recorded an average pace of + 6.51% over the last four quarters. PEP recently announced EPS of $ 1.79 in October, a surprise of + 3.47% from consensus. The PEP is reaching new all-time highs and has increased by almost 24% in the past year.
PEP management has raised its revenue forecast for 2021 against a backdrop of growing market share in the liquid refreshing drinks category. The company now expects organic revenue growth of 8% compared to the 6% growth anticipated earlier in the year. Zacks’ consensus estimate for 2021 revenue is now $ 78.54 billion, which would translate to an 11.6% growth from last year.
PEP to release final quarterly results for 2021 on February 10e. The consensus estimate for EPS stands at $ 6.25, which represents a growth rate of 13.22% over 2020 EPS.
The Coca-Cola Company.
The Coca-Cola Company manufactures, markets and sells a variety of non-alcoholic beverages around the world. KO is the world’s largest beverage company and includes well-known names like Dasani Waters, Del Valle Juices & Nectars, Fanta, Gold Peak Teas & Coffees, Honest Tea, Minute Maid Juices, Powerade Sports Drinks , Simply, Sprite and Vitaminwater juices. The company operates through a diverse network of distributors, wholesalers and retailers. KO was founded in 1886 and is headquartered in Atlanta, Georgia.
At Zacks # 2 Buy stock, KO has exceeded earnings estimates in each of the past eighteen quarters, with an average positive surprise of 14% over the past year. The Coca-Cola company recently reported EPS of $ 0.65 in October, a surprise of + 12.07% from consensus. KO shares have climbed nearly 21% in the past year and are currently hitting all-time highs.
KO set to release its latest set of 2021 quarterly results on February 9e. Zacks’ consensus estimate projects growth of 16.92% (EPS of $ 2.28) from 2020.
Keurig Dr Pepper, Inc.
Keurig Dr. Pepper is a global beverage company. KDP manufactures and distributes non-alcoholic beverages, offering non-alcoholic beverages, teas, juices, blenders, waters and other beverages. Its well-known brands include Dr. Pepper, Green Mountain Coffee Roasters, Canada Dry, Snapple and Bai. The company also creates and distributes various end products related to its coffee systems, including coffeemakers, K-Cup pods, and specialty coffee. KDP was founded in 1981 and is headquartered in Burlington, MA and Frisco, TX.
KDP has met or exceeded profit estimates in each of the past fourteen quarters. The company posted an average surprise over the last four quarters of + 1.66%. KDP shares followed suit, advancing 21.66% in the past year.
With more than 25,000 employees, KDP operates more than 120 offices, manufacturing plants, warehouses and distribution centers in North America. Management has raised its sales forecast for 2021 and reiterated its profit forecast. Zacks’ consensus estimate for 2021 revenue projects an 8.47% increase from 2020.
KDP Expected to Release 2021 Quarterly Final Results on February 24e. Analysts expect EPS of $ 1.60, growth of 14.29%.
The consumer staples sector has outperformed the general market in recent weeks. These three long-term winners all break out and probably still have room to run.
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Zacks Top 10 stocks for 2022
In addition to the investment ideas discussed above, would you like to know our top 10 picks for all of 2022?
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