Could you post your analysis of Pepsi. I am interested to know why you think it's a steal. I am not disagreeing as I know very little about PEP. Just curios as to what others emphasize when evaluating companies.
I think it's a steal because interest rates are 5.6% and show no signs of rising anytime soon, Pepsi is second in what is basically a duopoly industry, and Frito Lay is one of the most dominant companies in the U.S. Potato prices in Florida have skyrocketed lately and since Pepsi gets a lot of its potatoes from Florida (?) its price is down. Buying when a stock is down due to bad weather is usually a good way to make money.
On the negative side, the company is putting less emphasis on the baby boomers and more on "generation next" (14-22 year olds), a segment of the U.S. market which is shrinking relative to that of people over 40. I hope for their sake they don't continue to do this much longer.
the analysis left out a few things including what is Pepsi's:
10 year return on shareholder equity debt to equity gross margin operating margin net margin working capital inventory turns annual recurring capital costs reported and true book value collection time
and most importantly...
intrinsic value listing all assumptions. I hope the 5.6% interest rate isn't an assumption because Warren Buffett has specifically warned against using historically low rates to calculate intrinsic value because it artifically inflates intrisnic value.
I grant the duopoly. Although it can only be applied to the fountain business and not to the other 'drink' businesses in which Pepsi may or may not compete in.
As for Frito Lay, it has numerous competitors. I'd rather see Pepsi sell off that operation unless they can show that the operation benefits current returns on shareholder equity. If it doesn't, then there's no point in keeping the Frito Lay brand.
Let's see, Pepsi is second in a two company industry. That looks like last to me. The only hope for this sucker is to spin off the Frito Lay division into a separate company (Coke ain't into foodstuffs, you know) and concentrate on making their beverage business competitive with the "real thing". ljh