PEP has performed well the past twelve months but I don't like its prospects for the next twelve.
PEP has been strengthened by "safe haven" buying, not by any improvement in fundamentals.
Essentially KO and PEP are a monopoly and compete only with themselves. They spend more on advertising and promotion than on product development. There is really no prospect for any exceptional earnings growth going forward.
Once the economy picks up shareholders will abandon KO and PEP in droves. And for all its cash flow, PEP does not even offer a decent dividend to attract longer term holders.
Once the economy picks up the "save haven" issues will be yesterday's news. I would take profits in PEP before the end of 2002.