Core Viewpoint - UBS has released a list of preferred stocks in the consumer sector, selecting seven stocks with differentiated investment value based on unique data sources. Group 1: Recommended Stocks - **PepsiCo (PEP.US)** is expected to show significant improvement potential over the next 12 to 18 months, with a projected high single-digit growth in earnings per share for the full year of 2026, making its risk-reward ratio highly attractive among the recommended stocks [1]. - **J.M. Smucker (SJM.US)** is forecasted to achieve an organic growth rate of 5.6%, slightly above the market expectation of 5.5%, driven by strong pricing power in its coffee segment and cost-saving measures [1]. - **Albertsons (ACI.US)** is viewed as having excessive stock price correction, with its pharmacy business achieving double-digit growth for 15 consecutive quarters, indicating strong customer lifetime value [2]. - **Dutch Bros (BROS.US)** is expected to continue its upward trajectory, supported by leading store expansion and sales growth momentum projected to last until mid-2026 [2][3]. - **Ulta Beauty (ULTA.US)** is showing strong execution under new leadership, with improved operational efficiency and a favorable competitive environment, which is expected to support its growth momentum [3]. - **On Running (ONON.US)** is focusing on product innovation and maintaining a premium brand position, which is anticipated to lead to industry-leading sales growth and profit margin improvements [3]. - **Peloton (PTON.US)** is rated as a "buy" with a target price of $11, supported by revenue growth and cost optimization, alongside a positive trend in core metrics [4].

Core Insights - Whole Foods Market serves as a significant incubator for innovative food and beverage brands, providing them with essential support and exposure to a targeted consumer base [1][21][30] Group 1: Case Studies of Successful Brands - Poppi, a prebiotic soda brand, was acquired by PepsiCo for $19.5 billion after gaining traction through Whole Foods Market, which played a crucial role in its growth and brand recognition [1][4][20] - Hint, a no-sugar flavored water brand, also began its journey at Whole Foods, where it received initial support and became a popular product, achieving a valuation of $220 million by 2021 [8][20] - Siete, a plant-based brand, was acquired by PepsiCo for $1.2 billion in 2024, with its growth closely tied to its partnership with Whole Foods [12][20] Group 2: Whole Foods Market's Role - Whole Foods Market acts as a "testing ground" for new brands, allowing them to reach health-conscious consumers and providing an implicit endorsement that enhances their credibility [3][21][23] - The supermarket chain has a flexible procurement structure, enabling local suppliers to replace international brands if their products meet quality standards, thus fostering innovation [23][26] - Whole Foods has initiated programs like the Local and Emerging Accelerator Program to support emerging brands, offering training and potential shelf space in stores [28][30] Group 3: Market Trends and Consumer Behavior - The rise of health-focused products has led to increased demand for innovative food and beverage options, with Whole Foods being a key player in identifying and promoting these trends [26][30] - Brands like Justin's and Siggi's have also successfully transitioned from local markets to national distribution through their relationship with Whole Foods, highlighting the supermarket's influence in the industry [17][18][20]

Group 1: Consumer Sector Recommendations - UBS has released a list of preferred stocks in the consumer sector, identifying seven stocks with differentiated investment value [1] - PepsiCo (PEP.US) is expected to show significant improvement potential over the next 12 to 18 months, with a projected high single-digit growth in earnings per share for 2026 [1] - J.M. Smucker (SJM.US) is forecasted to achieve an organic growth rate of 5.6%, supported by strong pricing power in its coffee segment, which is above the market expectation of 5.5% [1] - Albertsons (ACI.US) has seen its stock price decline excessively, with its pharmacy business achieving double-digit growth for 15 consecutive quarters, indicating strong customer value [1] Group 2: Growth Potential in Coffee and Beauty Sectors - Dutch Bros (BROS.US) is anticipated to continue its sales and customer traffic growth, with a projected revenue increase of over 20% driven by strong brand recognition and competitive new products [2] - Ulta Beauty (ULTA.US) is expected to maintain its growth momentum under new leadership, with improved operational efficiency and a favorable competitive environment, leading to upward revisions in profit expectations for fiscal year 2024 [2] Group 3: Sports and Fitness Industry Insights - On (ONON.US) is focusing on product innovation and direct-to-consumer expansion, which is expected to lead to industry-leading sales growth and improved profit margins [3] - Peloton (PTON.US) is rated as a 'buy' with a target price of $11, supported by revenue growth and cost optimization, with a key focus on improving subscription user growth despite potential pricing risks [4]

Core Insights - The launch of the Supporting Trusted Engagement and Partnership (STEP) up for Agriculture initiative aims to enhance the capacity and sustainability of farmer-facing support organizations across North America, involving major companies like PepsiCo and Unilever [1][5][12] - The initiative focuses on promoting regenerative agriculture practices to improve soil health, reduce emissions, and enhance biodiversity, with PepsiCo targeting the adoption of these practices across 10 million acres by 2030 [2][5][6] Group 1: Initiative Overview - STEP up for Agriculture is a collaboration among leading retail and food companies to scale regenerative agriculture through locally tailored support systems [5][8] - The initiative aims to strengthen farmer-facing organizations by providing tools, training, and funding to accelerate the adoption of sustainable practices [5][12] - A pilot program is already underway in Spain, marking a global push towards regenerative agriculture [5][11] Group 2: Goals and Commitments - PepsiCo sources approximately 50 key agricultural crops from over 60 countries and aims to drive regenerative agriculture practices across 10 million acres by 2030 [2][5] - Unilever is committed to implementing regenerative agriculture principles across 1 million hectares globally by 2030 [6][12] - The initiative seeks to create a shared ecosystem of support that empowers farmers and drives lasting change at scale [8][12] Group 3: Importance of Local Support - The success of regenerative agriculture relies on trusted relationships and local expertise, with farmer-led support groups being critical for adoption [3][4] - The initiative emphasizes the need for an ecosystem of learning, where experienced farmers mentor others to adopt new conservation practices [7][9] - By investing in local organizations, the initiative aims to unlock scale and foster innovation throughout the supply chain [4][5] Group 4: Future Plans - Over the next two years, STEP up for Agriculture will facilitate peer learning, host workshops, and develop shared tools to scale impact [10][11] - The initiative will establish measurement, reporting, and verification systems to track sustainable progress against goals [11][12] - The partnership model includes contributions from corporate, philanthropic, and farmer-facing support organizations to enhance advisory capacity [12][14]

Core Viewpoint - Elliott Investment Management, managing $4 billion in PepsiCo, seeks significant changes to enhance the company's performance despite recognizing it as a strong consumer franchise [1][4][5]. Group 1: Elliott's Goals and Recommendations - Elliott aims to help PepsiCo sharpen focus, drive innovation, and unlock value from its leading brands and scale [4][5]. - The investor believes PepsiCo is at a "critical inflection point" and describes it as a "dramatic under-performer" in North America [7][8]. - Recommendations include reviewing the North American food and drinks business structure, refranchising the drinks bottling network, and streamlining the beverage portfolio [6][9][25]. Group 2: Financial Performance and Market Context - In 2024, PepsiCo reported net revenue of $91.85 billion, a 0.4% increase year-over-year, with operating profit growing 7.5% to $12.89 billion [13]. - However, the company faced challenges, including a 0.3% decline in first-half net revenue and a 35.4% drop in operating profit [16]. - PepsiCo's share price has fallen over 5% this year, contrasting with Coca-Cola's nearly 8% increase [16]. Group 3: Portfolio Optimization and Strategic Moves - Elliott emphasizes the need for PepsiCo to optimize its portfolio by offloading non-core and underperforming assets, similar to strategies employed by Coca-Cola and Unilever [21][24]. - The investor praised PepsiCo's recent sale of Rockstar brand rights as a positive step towards simplifying its portfolio [24]. - There is speculation about the future of Quaker within PepsiCo's portfolio, with suggestions that it may lack strategic interest without Tropicana [22][23]. Group 4: Management and Investor Sentiment - PepsiCo's management has acknowledged Elliott's input, stating they value constructive dialogue to enhance long-term shareholder value [12][18]. - Investor sentiment appears mixed, with some skepticism regarding the feasibility of Elliott's proposals, particularly around refranchising [30]. - Analysts suggest that Elliott's involvement may create urgency for management to improve performance and address operational challenges [29].

"Love is lovelier the second time around." Lines written by Sammie Cahn and Jimmy Van Heusen many years ago just might apply to wide-moat behemoth PepsiCo (NASDAQ: PEP ) (NEOE: PEP:CA ), which has been miredJust a plain 'ole opportunistic investor. +30 years diversified experience in financial services: credit analyst, high yield bond analyst, real estate portfolio manager, investment adviser. CFA, MBA. Formerly a lecturer in finance at major US university. My purpose as an author is to educate the investor ...

Core Viewpoint - The article suggests that PepsiCo may be experiencing a resurgence in its market position, drawing parallels to the sentiment expressed in the quote "Love is lovelier the second time around" [1]. Group 1 - PepsiCo is described as a "wide-moat behemoth," indicating its strong competitive advantages in the market [1]. - The company has been facing challenges but is positioned to capitalize on new opportunities [1]. - The author emphasizes the importance of due diligence for investors, particularly novice ones, in evaluating publicly traded securities like PepsiCo [1].

Core Insights - Celsius Holdings Inc. is enhancing its position in the energy drink market through a new distribution agreement with PepsiCo, which grants it category captain status and improved control over shelf space and product placement [1][2] - The partnership includes the addition of Alani Nu and Rockstar to Celsius' portfolio, which is expected to unlock new growth opportunities [1][3] Distribution and Market Presence - The revamped deal with PepsiCo secures guaranteed visibility for Celsius, allowing control over planograms and SKU prioritization in designated coolers [2] - Alani Nu is anticipated to benefit from larger displays, while Rockstar will have an optimized assortment focused on faster-selling products [3] Sales Performance - Celsius experienced a significant surge in U.S. retail sales, with a 120.8% increase in the four weeks ending August 10 [4] - The energy drink category is witnessing a shift in consumer preferences, with sales climbing 16.7% over the past 12 weeks as consumers move away from higher-priced iced coffee [4] Financial Metrics - Celsius reported strong profitability with second-quarter EBIT margins of 27.2% and gross margins of 51.5% [5] - The company aims for mid-50% gross margins and 30% EBITDA margins, which are considered achievable with potential upside [5] Competitive Landscape - Rockstar is facing challenges, with U.S. retail sales down 11.1% in the 12 weeks ending August 10, following a 14% decline in the previous period [6] - Despite these challenges, the inclusion of Rockstar in the PepsiCo partnership is expected to enhance Celsius' bargaining power and distribution scale [6] Future Projections - Piper Sandler projects Celsius' revenue to reach $2.42 billion and earnings of $1.02 per share in fiscal 2025, increasing to $3.32 billion and $1.35 per share in 2026 [7]

Core Thesis - Celsius Holdings, Inc. is positioned for accelerated growth following a transformative strategic deal with PepsiCo, enhancing its market presence in the energy drink sector [2][4] Strategic Partnership - The agreement with PepsiCo allows Celsius to leverage Pepsi's logistics network for Alani Nu distribution, addressing gaps in convenience store coverage, which is crucial for energy drink sales [2] - Celsius secures a "category captain" role for energy drinks, gaining control over planograms, SKU prioritization, and promotion strategy, optimizing marketing across its brands [2] Acquisition of Rockstar Energy - Celsius acquired U.S. and Canadian rights to Rockstar Energy from Pepsi for $585 million, a significant discount due to Pepsi's mismanagement of the brand [3] - The refocus of Rockstar towards party, festival, and extreme sports segments aims to reclaim market share from competitors like Monster and Red Bull [3] Growth Potential - The deal enhances Celsius's scale, marketing power, and negotiating leverage with Pepsi, creating opportunities for operational improvements and brand revitalization [4] - Robust organic growth in Alani Nu and successful integration of acquisitions position Celsius for expanded market penetration and a strengthened competitive profile [4] Market Reaction - The stock has reacted positively to these developments, indicating investor confidence in Celsius's long-term value creation potential [4] - The stock has appreciated approximately 56% since a previous bullish thesis, reflecting strong brand equity and resilience amid distribution disruptions [5]

Core Insights - The beverage industry is characterized by intense competition, particularly between PepsiCo and Monster Beverage, highlighting the contrast between a diversified portfolio and a specialized focus on energy drinks [1][2] PepsiCo Overview - PepsiCo's investment appeal is driven by its adaptability and innovation across beverages and foods, focusing on health, functionality, and value [3] - The company is refreshing legacy brands and expanding into the "better-for-you" snack segment with clean-label products and healthier ingredients [4] - PepsiCo's "One North America" initiative aims for operational integration, enhancing efficiency and enabling reinvestment in digital transformation [5] - The company is embedding data-driven capabilities across operations, including automation and digital consumer engagement, to strengthen brand presence [6] - PepsiCo's strategy combines affordability with premiumization, enhancing its relevance across various demographics and income levels [7] - Despite global trade pressures, PepsiCo's agility in sourcing and revenue management provides resilience against supply chain volatility [8] Monster Beverage Overview - Monster Beverage has established itself as a leading energy drink brand, with significant market share in the U.S. and international markets [9][10] - The company focuses on innovation and brand differentiation, launching new flavors and collaborations to maintain cultural relevance [12] - Monster Beverage's growth is supported by disciplined cost management and selective pricing, despite facing some tariff-related challenges [13] Price Performance & Valuation - Over the past three months, PepsiCo shares have increased by 8.8%, while Monster Beverage shares have grown by 2.5% [14] - PepsiCo trades at a forward P/E of 16.82X, significantly lower than Monster Beverage's 31.03X, suggesting a more attractive valuation for income-focused investors [15][18] - PepsiCo's lower valuation reflects its maturity and defensive appeal, while Monster Beverage's premium valuation indicates higher growth expectations [18][19] Earnings Estimates - PepsiCo's EPS estimates for 2025 and 2026 have seen slight upward revisions, with projected revenues of $93.1 billion for 2025 [20] - Monster Beverage's revenue and EPS for 2025 are expected to increase by 7.7% and 17.3%, respectively, reaching $8.1 billion and $1.90 per share [23] Investment Appeal - Currently, PepsiCo is viewed as a more attractive investment due to its stronger share price momentum, broader portfolio, and steady dividend stream [24][26] - Monster Beverage, while representing a high-growth opportunity, faces vulnerabilities due to its premium valuation and reliance on rapid innovation [25][26] - PepsiCo's combination of value, momentum, and earnings visibility positions it as a steadier choice compared to Monster Beverage's high-octane growth narrative [26]