A Drumbeat Against Soda Pop? Are Coke and Pepsi Shares Vulnerable?

YCharts

The New York Times is reporting today the latest salvo by healthcare officials against soda pop, and investors may think Coca-Cola (KO) and Pepsico (PEP) are immune to such talk.

Perhaps they are. YCharts wondered along with other news outlets in 2010 whether the Obama Administration’s focus on healthcare would lead to a tax on soda pop, and of course that hasn’t happened yet. But Mayor Bloomberg has taken aim in New York at big sweetened soda portions, and the rising rate of obesity and all the health effects it leads to has medical officials increasingly critical of the role soda pop plays in American diets.

Coke and Pepsi trade at enviable PE ratios for slow-growth companies, and enjoy lush profit margins.

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KO PE Ratio TTM Chart

The betting here is that, at some point in the not-too-distant future, a combination of increased consumer awareness and government action on some level begins to eat into soda sales.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com.


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