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Is Keurig Dr Pepper (KDP) a Smart Long-term Buy?

·3 min read

Oakmark Fund recently released its third-quarter investor letter – a copy of which is available for download here. The fund posted a return of 6.2% for the quarter, underperforming its benchmark, the S&P 500 Index which returned 8.9% in the same quarter. You should check out Oakmark Fund's top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Oakmark Fund's highlighted a few stocks and Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of them. Keurig Dr Pepper Inc. (NASDAQ:KDP) is a beverage company. Year-to-date, Keurig Dr Pepper Inc. (NASDAQ:KDP) stock gained 7.5% and on December 17th it had a closing price of $31.13. Here is what Oakmark Fund's said:

"Keurig Dr Pepper is one of North America’s leading beverage companies and commands dominant positions in single-serve coffee and flavored sodas. We believe single-serve coffee pods will capture almost all of the incremental growth in at-home coffee consumption because coffee drinkers increasingly prefer K-Cups over drip brewing due to its greater convenience, quality, variety and value. Keurig’s competitive advantages (low-cost production, the largest installed base of brewers, exclusive brand partnerships) allow it to collect a toll on most pods sold in North America. The company’s soda franchises remain highly profitable, and we do not expect health-related concerns about sugar to materially impact consumption trends. We believe that Keurig’s brands should deliver steady growth, consistent market share gains and significant excess cash. We think the company is an above-average business trading at a meaningful discount to the broader market, its beverage peers and historical private market transactions."

Copyright: dmitrymoi / 123RF Stock Photo

Last month, we published an article revealing that Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of the 15 largest beverage companies in the world.

In Q3 2020, the number of bullish hedge fund positions on Keurig Dr Pepper Inc. (NASDAQ:KDP) stock increased by about 41% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in KDP's growth potential. Our calculations showed that Keurig Dr Pepper Inc. (NASDAQ:KDP) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

Disclosure: None. This article is originally published at Insider Monkey.