Core Viewpoint - PepsiCo (PEP) is recognized as a leading player in the Consumer Staples sector, demonstrating consistent operational success and rewarding shareholders over the years [1]. Financial Performance - PEP's latest earnings report showed sales growth of 1% year-over-year, while adjusted EPS fell by 7% [3]. - The company maintained its current year financial guidance despite challenges in North America, which positively influenced share performance post-earnings [4]. - Analysts have noted a bearish outlook for the upcoming earnings, with the Zacks Consensus EPS estimate down approximately 3% over recent months, although there has been some stability in revisions [5][9]. Market Position - PEP shares are currently trading at a historically low forward 12-month earnings multiple of 17.0X, reflecting a 28% discount compared to the S&P 500, marking one of the lowest valuations in the past five years [8][12]. - The stock has been in a long-term downtrend, decreasing by 7% over the last two years, indicating that even minor positive news could stabilize share prices [12]. Strategic Initiatives - The company has strengthened its long-term strategic partnership with Celsius, enhancing its energy drink portfolio, which is expected to provide favorable momentum moving forward [10]. Expectations and Outlook - PEP's upcoming earnings report is anticipated to provide insights into North America results and international momentum, with stable EPS revisions and positive sales revisions creating a favorable backdrop [9][11].

Core Viewpoint - The consumer staples sector is viewed as a safe investment during economic uncertainty, as it includes companies that produce essential goods that people need daily [1][5]. Group 1: Definition and Characteristics of Consumer Staples - Consumer staples stocks consist of companies that produce or sell basic goods, such as groceries and personal-care items [6]. - The Global Industry Classification Standard (GICS) categorizes the Consumer Staples sector as including food and staples retail, food and beverage production, and household and personal product manufacturing [7]. - These stocks are considered defensive, generating stable revenues and producing significant free cash flow, often returned to shareholders as dividends [8]. Group 2: Investment Rationale - Investors are drawn to consumer staples stocks because they provide a steady demand for necessities, making them less sensitive to economic fluctuations [8]. - Historical performance shows that consumer staples outperformed the S&P 500 during major downturns, such as the Great Recession and the COVID-19 crash [10]. - Despite their defensive nature, consumer staples may have limited growth potential during economic expansions, as demand for basic goods does not significantly increase [11]. Group 3: Identifying Quality Consumer Staples Stocks - A quality screen for consumer staples stocks includes criteria such as being part of the S&P Composite 1500, having a long-term estimated earnings-per-share growth rate of at least 5%, and having at least five covering analysts [12][13][14]. - Stocks should also have a consensus Buy rating of 2.5 or less and a dividend yield of at least 1.5% to ensure they provide better income than the S&P 500 [15][16]. Group 4: Recommended Consumer Staples Stocks - The following companies are highlighted as strong consumer staples stocks based on the outlined criteria: - Dollar General (DG): Long-term EPS growth of 6.5%, consensus rating of 2.39, dividend yield of 2.1% [16] - Tyson Foods (TSN): Long-term EPS growth of 19.6%, consensus rating of 2.29, dividend yield of 3.5% [16] - Kroger (KR): Long-term EPS growth of 6.1%, consensus rating of 2.16, dividend yield of 1.8% [16] - Sysco (SYY): Long-term EPS growth of 6.1%, consensus rating of 2.10, dividend yield of 2.6% [16] - Keurig Dr Pepper (KDP): Long-term EPS growth of 7.2%, consensus rating of 1.91, dividend yield of 2.7% [16] - Philip Morris International (PM): Long-term EPS growth of 11.4%, consensus rating of 1.88, dividend yield of 3.0% [16] - Coca-Cola (KO): Long-term EPS growth of 6.1%, consensus rating of 1.62, dividend yield of 2.9% [16]