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As Coca-Cola looks to bring Coke Energy to the U.S., the company gained a major win in arbitration against energy drink king Monster Beverage.
While many investors are focused on the negative impacts of tariffs and the U.S.-China trade war on corporate profits, they may be overlooking another sizable threat, which is rapidly rising labor costs. The median company in the S&P 500 Index (SPX) pays out 13% of its revenues in the form of employee compensation, and these costs grew by 3% in 2018, the fastest pace during the current economic expansion, which began in June 2009, Goldman Sachs reported this week. Goldman believes that stocks with lower than average labor costs as a percentage of sales are well-positioned to outperform in this environment.
AB InBev (BUD) witnesses robust sales momentum on strength in global brands as well as global premiumization and revenue management plans. However, higher costs continue to mar the bottom line.
PepsiCo (PEP) beats earnings and sales estimates in second-quarter 2019. Results gain from strength in all of its businesses.
Some investors have “extreme theories” about the companies’ relationship, according to Bernstein analysts.
The index enjoyed a holiday-shortened but successful week, buoyed by rate cut hopes and a reduction in trade tensions.
Does the July share price for Monster Beverage Corporation (NASDAQ:MNST) reflect what it's really worth? Today, we...
Arbitrators provide clearance for the sale of Coca-Cola's (KO) energy drink brand. This resolves Coca-Cola's dispute with Monster Beverage regarding an agreement signed in 2015.
Monster Beverage Corp (NASDAQ: MNST ) shares haven't lost their fizz despite a decision Monday that opens the door to more competition for the brand. What Happened The Coca-Cola Co (NYSE: KO ) and Monster ...
shares were gaining Monday after an arbitrator settled a dispute between the two companies. In the decision, Coke received the green light to sell its own energy drink. A tribunal of the American Arbitration Association ruled June 28 that Coca-Cola Energy products fall within an exception to a non-compete provision.
The soda maker was in arbitration with Monster Beverage over the launch of Coca-Cola Energy, as it would put the company in direct competition with Monster and violate their initial agreement in 2015. Atlanta-based Coca-Cola launched the drink as a part of its efforts to break away from its traditional fizzy sodas and shift to health-focused trends. Coca-Cola Energy, first launched in Spain and Hungary in April, has caffeine from naturally derived sources, guarana extracts, B vitamins and no taurine - a stimulant often found in energy drinks.
An arbitration tribunal has ruled that Coca-Cola Co can sell its energy drink globally under the terms of the contract with Monster Beverage Corp, the two companies said on Monday, months after the launch of the product in Europe. The soda maker was in arbitration with Monster Beverage over the launch of Coca-Cola Energy, as it would put the company in direct competition with Monster and violate their initial agreement in 2015. Atlanta-based Coca-Cola launched the drink as a part of its efforts to break away from its traditional fizzy sodas and shift to health-focused trends.
Coca-Cola Co. announced a decision from the American Arbitration Association that says it can sell Coca-Cola Energy, a line of energy products, without breaking the terms of a contract with Monster Beverage Corp. . The announcement sent Monster shares down nearly 3% in Monday premarket trading. Coca-Cola stock inched up 0.5%. "The companies respect the arbitrators' decision and appreciate that the dispute was resolved amicably," the announcement said. "While there was a disagreement between Coca-Cola and Monster over contractual language, the companies value their relationship and look forward to their continued partnership." The arbitrators found that Coca-Cola Energy falls within a non-compete portion of the deal between the two companies. Coca-Cola stock has gained 7.5% for the year to date, Monster shares are up 29.7%. And the Dow Jones Industrial Average has rallied 14% for the period.
Brown-Forman (BF.B) is in rough waters, thanks to impacts of higher tariffs imposed on American spirits. However, its strong brand portfolio and innovation efforts may help it sail through.
PepsiCo (PEP) is focusing on driving greater efficiency and effectiveness, by lowering costs and plowing back savings to develop scale and core capabilities.
Coca-Cola (KO) gains from continued innovation and investment in core categories and brands. These traits have been bolstering its quarterly performances. However, currency headwinds remain.
PepsiCo experienced strong organic revenue growth of 5.2% in the first quarter driven mainly by the performance of its Frito-Lay North America segment. However, the company doesn’t expect this impressive rate of growth to continue in the remainder of 2019.
Monster Beverage (MNST) is benefiting from brand strength, constant product launches and innovations. Further, the company is on track with growth in its international markets.
The other day I saw an article in Forbes by value investor John Dorfman that examined four stocks to buy with little debt and high profitability. The stocks mentioned were National Beverage (NASDAQ:FIZZ), Gentex (NASDAQ:GNTX), Cactus (NYSE:WHD) and Deckers Outdoor (NASDAQ:DECK). Of Dorfman's four picks, I'm familiar with three of them. Cactus is the outlier of the group. It turns out the company makes wellheads and flow control products for the energy industry. InvestorPlace - Stock Market News, Stock Advice & Trading TipsYou learn something new every day in this business.Anyway, I'm always on the lookout for a good story idea, so I thought I'd run with Dorfman's theme and come up with seven S&P 500 stocks to buy that have little debt and lots of profits. * 6 Stocks Ready to Bounce on a Trade Deal To qualify, a company must have a debt-to-equity ratio of 20% or less and a return on equity 15% or higher. S&P 500 Stocks to Buy: Monster Beverage (MNST)Source: Mike Mozart via Flickr (modified)Monster Beverage (NASDAQ:MNST), one of the world's leading makers of energy drinks, has zero debt, $880 million in cash and marketable securities, and a return on equity of 28.6%. After conquering the energy drinks field, Monster is looking to capture a big chunk of the cannabis- and alcoholic-beverage markets. According to the Wall Street Journal, Monster is said to be interested in rolling out hard seltzers, malt beverages, and cannabis beverages once its non-compete (it's precluded from producing non-energy drinks) clause with Coca-Cola (NYSE:KO) ends in 2020. "This move actually makes a lot of sense for the company because Coke is looking more and more like a threat. In April, the brand debuted Coca-Cola Energy in Spain and Hungary, and it already sounds healthier than Monster," Delish reported June 12. Nobody thought Monster would rule the energy drink business, but here it is. I wouldn't bet against CEO and co-founder Rodney Sacks. He knows a thing or two about winning in the beverage biz. Foot Locker (FL)Source: Shutterstock Foot Locker (NYSE:FL), has gotten hammered in the past month, down approximately 25%. Nonetheless, the global retailer of sneakers has a remarkably strong balance sheet with $123 million in long-term debt, cash and cash equivalents of $1.1 billion and a return on equity of 26.9%. How do you lose 25% in a single month?Well, in Foot Locker's case, it missed analysts' first-quarter earnings estimate by eight cents. That's right, the consensus was $1.61, and FL came in at $1.53. On the top line, analysts were expecting sales of $2.11 billion; Foot Locker delivered revenues that were $33 million lower than expected. Hardly a bad earnings result -- comps rose by 4.6% during the quarter, suggesting to me that the long-term goals it has in place will surely be met. * 7 Value Stocks to Buy for the Second Half In the meantime, FL stock gives you a dividend yield of 3.7% and trading at 8.1 times its forward earnings.Can you say value stock? I knew you could. Hormel Foods (HRL)Source: Mike Mozart via Flickr (Modified)It's only appropriate that a pescetarian such as myself recommend a stock like Hormel Foods (NYSE:HRL), the makers of Spam, the most disgusting meat-based product ever created. No matter. The company has a great balance sheet with just $257.1 million in long-term debt, $639.3 million in cash and cash equivalents, and a return on equity of 19.5%.As I said, Spam is a horrible product, but a particular segment of the population seems to love it, and it pays the bills. In the first six months of 2019, Hormel's total segment profit was $615.4 million on $4.7 billion in sales, an operating profit of 13.1%. The meat-based food company is slowly making its way into plant-based foods such as a vegan pizza topping to meet the needs of consumers. While not at the front of the pack, it's working hard behind the scenes to deliver for its customers. "We understand that it is a shiny new toy," CEO Jim Snee said at a food conference in Paris recently. "We get that. It is one of our shiny new toys as well. It is something that is certainly on our minds like it is everyone else, and there is a lot of work happening both in the market and behind the scenes."Perhaps there is life after Spam. SVB Financial (SIVB)Source: Shutterstock SVB Financial (NASDAQ:SIVB) is my favorite American bank because it helps innovators and entrepreneurs around the world build their businesses.The holding company of Silicon Valley Bank has long-term debt of just $696.7 million, cash and cash equivalents of $7.1 billion, $28.9 billion in loans outstanding and a return on equity of 22.1%, which is over 800 basis points higher than JPMorgan (NYSE:JPM). In January, SIVB paid up to $340 million for Boston-based Leerink Partners LLC, an investment bank specializing in the healthcare industry. With all the changes happening in healthcare, owning a business that understands healthcare and life sciences companies, will continue to demonstrate why its a bank built on innovation. * 5 Stocks to Buy for $20 or Less Whenever it drops below $200 over the next few years, investors should buy SIVB stock. You won't regret it. Intuitive Surgical (ISRG)Source: Jon Fingas via Flickr (Modified)In February of this year, Intuitive Surgical (NASDAQ:ISRG), the makers of the da Vinci surgical system, got the green light from the FDA for Ion by Intuitive, a flexible robotic catheter that helps physicians reach "nodules in any airway segment within the lung."If you've owned ISRG stock, you're likely delighted by the news because it takes this goose beyond its golden egg. While I don't believe Intuitive is anywhere near the saturation point for its da Vinci surgical system, Ion shows it's also not a one-trick pony. That said, being a one-trick pony has made long-term shareholders very wealthy. CEO Gary Guthart owns 701,824 shares of ISRG that are worth a cool $374 million. That could buy a bunch of its surgical systems. ISRG stock hasn't done much so far in 2019, up just 13.2% year to date, but that's okay. It's got a great balance sheet with no debt, cash and marketable securities of $2.8 billion, and a return on equity of 17.9%. Long-term, I don't think you can go wrong with ISRG. A.O. Smith (AOS)Source: Nvdongen via Wikimedia (Modified)The last three years have not been kind to A.O. Smith (NYSE:AOS), the Wisconsin-based maker of water heaters, boilers and water treatment and filtration systems for both commercial and residential use. I first became interested in the company in 2012 because of its tankless water heaters. It has been so long that I can't remember exactly why I was interested in tankless water heaters. As I got to know the business, I couldn't help but recommend its stock. In recent years, AOS has significantly underperformed the S&P 500, which is unusual for a company that has delivered an annualized total return of 16.5% over the past 15 years. Unfortunately, to make matters worse, J Capital Research, a short seller intent on driving down AOS stock, made allegations against the company about its Chinese operations that suggested it was inflating sales and profits in China. The company flatly denies the allegations. All I can say is that I've followed the company's progress over the past seven years and I'm going to believe it's worth standing behind this business until proven otherwise. * 7 Top-Rated Biotech Stocks to Invest In Today As of the end of March, A.O. Smith had $277.6 million in long-term debt; $633.3 million in cash and marketable securities; and a return on equity of $20.6%. Ulta Beauty (ULTA)Source: Mike Mozart via FlickrFor almost two years, I wondered when Ulta Beauty (NASDAQ:ULTA) was going to expand to Canada. "For me, the fact that the company hasn't touched the surface when it comes to international expansion like Canada says the company's growth story is very much intact despite the headwinds it might face," I wrote on August 23, 2017. Well, the beauty retailer finally announced May 30 that it was coming to Canada, after studying various countries to figure out where it would launch its international expansion. "International expansion represents an attractive and incremental long-term growth platform, which extends our core capabilities and leverages our value proposition," CEO Mary Dillon said on Ulta's Q1 2019 conference call. "We believe that the Ulta Beauty value proposition is very relevant and differentiated in multiple geographies around the globe and Canada is an attractive and logical place to start."Dillon is one of the best retail executives in the U.S. I'm sure she will do what's best for shareholders and figure out the right pace for opening stores in Canada. Although Sephora and Shoppers Drug Mart provide competition, Ulta's in-store experience combined with top-notch online sales provides a loyal customer base that spends more.With $521.8 million in cash and marketable securities, no debt, and a return on equity of 40.9%, ULTA shareholders can look forward to more growth when it hits Canada in late 2020 or early 2021. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits appeared first on InvestorPlace.
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