Despite soaring prices, food and beverage sales have remained steady in August. According to Census Bureau, spending at food and beverage retailers increased marginally for the month and by 7.2% year-over-year.
Moreover, demand for non-alcoholic beverages is surging amid rising health awareness. According to Statista, non-alcoholic spirits sales in the United States grew over 113% year-over-year in 2021, and similar momentum is estimated to persist in the coming years.
Furthermore, according to Research and Markets, the worldwide functional beverage market is projected to grow at a CAGR of 10.5% until 2027.
Given the backdrop, it could be wise to add popular beverage stocks The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), and Anheuser-Busch InBev S.A. ADR (BUD) to your watchlist now, considering their fundamental strength.
The Coca-Cola Company (KO)
KO manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, tea and coffee, and energy drinks.
On July 26, 2022, James Quincey, KO’s Chairman and CEO, said, “We are staying true to our purpose, executing on our strategy, and delivering value for our stakeholders.”
KO’s net operating revenue came in at $11.33 billion for the second quarter ended July 1, 2022, up 11.8% year-over-year. Its gross profit increased 2.4% year-over-year to $6.50 billion. Also, its total liabilities and equity came in at $93.17 billion for the period ended July 1, 2022, compared to $94.35 billion for the period ended December 31, 2021.
KO’s revenue is estimated to increase 9% year-over-year to $42.15 billion in 2022. Its EPS is estimated to grow 6.5% year-over-year to $2.47 in 2022. It has surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 7.4% to close the last trading session at $58.60.
KO’s overall B rating equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Sentiment, Stability, and Quality. Within the A-rated Beverages industry, it is ranked #20 out of 34 stocks. Click here to see the additional POWR Ratings for Momentum, Growth, and Value for KO.
PepsiCo, Inc. (PEP)
PEP manufactures, markets, distributes and sells beverages and convenient foods worldwide. It has seven segments- Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East, and South Asia; Asia Pacific, Australia and New Zealand; and China Region.
On September 14, 2022, PEP and agriculture company Archer Daniels Midland Co. (ADM) announced a 7.5-year strategic commercial partnership. This collaboration aims to enhance regenerative agriculture across the companies’ shared North American supply chains and is a step toward sustainable development.
In addition, on August 2, 2022, PEP signed a strategic agreement with premium Romanian spring water, AQUA Carpatica. PEP will own a 20% equity stake in AQUA Carpatica and is expected to extend its consumer base in Romania, Poland, and other countries in the U.S.
PEP’s net revenue came in at $20.23 billion for the second quarter ended June 11, 2022, up 5.2% year-over-year. Its gross profit increased 4.6% year-over-year to $10.81 billion. Also, its Frito-Lay North America segment’s revenue came in at $5.18 billion, up 13.8% year-over-year.
Analysts expect PEP’s revenue to increase 5.2% year-over-year to $83.60 billion in the current year. Its EPS is estimated to grow 6.9% year-over-year to $6.69 in 2022. It has surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 9.2% to close the last trading session at $168.45.
PEP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. PEP is ranked #10 in the same industry. Click here to see the additional POWR Ratings for PEP (Growth, Momentum, and Value).
Anheuser-Busch InBev S.A. ADR (BUD)
Headquartered in Leuven, Belgium, veteran company BUD produces, distributes, and sells beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of approximately 500 beer brands.
On July 28, 2022, Michel Doukeris, CEO, said, “The relentless execution of our strategy, the strength of our brands, and accelerated digital transformation enabled us to meet the moment in an ongoing dynamic operating environment.”
BUD’s revenue came in at $14.79 billion for the 2022 second quarter, up 9.3% year-over-year. Its gross profit increased 2.3% year-over-year to $8 billion, while its normalized EBITDA came in at $5.10 billion, up 5.2% year-over-year.
Street expects BUD’s revenue to increase 8% year-over-year to $58.64 billion in the current year. Its EPS is estimated to grow 8.1% year-over-year to $3.08 in 2022. BUD’s shares have lost 2.4% intraday to close the last trading session at $45.54.
BUD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our rating system. It has a B grade for Stability and Sentiment.
BUD is ranked #13 in the same industry. Click here to see the additional POWR Ratings for BUD (Growth, Momentum, Quality, and Value).
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KO shares were trading at $56.48 per share on Tuesday afternoon, down $1.39 (-2.40%). Year-to-date, KO has declined -2.48%, versus a -22.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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