Wall Street is paying attention to a silent gunfire and betting that the 20-year rule pattern among American beverage listed companies is about to change.
Investment bank Jefferies analyst Kaumil Gajrawala suggests investors buy PepsiCo, calling it the most sustainable company in the beverage industry. He expects PepsiCo's stock price to rise by more than 20% next year to reach $203, pushing the company's market value to $2790.
At the same time, Gajrawala only holds suggestions for Coca Cola and expects its target stock price to reach $64 (Monday's closing price of $56.93), which means its market value will reach $277 billion.
Gajrawala's viewpoint means that Pepsi is about to surpass Coca Cola as the largest beverage company in the United States. Interestingly, analysts from institutions such as Cowen and Goldman Sachs also strongly agree with this prospect.
Investment sees returns
Since 2006, Coca Cola has been the largest beverage manufacturer in the United States by market value, only briefly surpassed by PepsiCo in 2020. Until the US stock market closed on Monday, Coca Cola's market value was still more than $15 billion higher than Pepsi's.
Coca Cola's strong leading position is attributed to its strong brand portfolio and legendary sales growth record, with its impressive performance even causing Warren Buffett to "bend".
Buffett not only holds Coca Cola stocks through his company Berkshire Hathaway, but also answers investors' questions at shareholder meetings every year while drinking Coca Cola, becoming a popular topic in the investment industry and contributing vivid and powerful examples to value investing.
However, PepsiCo's continuous efforts in product differentiation in recent years may break Coca Cola's winning streak. The continuous growth of food businesses such as Le Shi potato chips, Doritos, and Quaker oatmeal has allowed PepsiCo's territory to expand and its cash flow to be more abundant and stable.
Gajrawala pointed out that PepsiCo has invested approximately $60 billion over the past five years to improve operational efficiency, production capacity, and build a brand. This huge investment is beginning to pay off and will continue to accelerate. Pepsi's snack business is very popular in the North American market, while Coca Cola is just a beverage company.
He also believes that PepsiCo is the most likely consumer goods company to achieve high single digit or higher income growth in the next three years. At the same time, Coca Cola's valuation has limited room to rise, and its tax dispute with the US Internal Revenue Service may also drag down its stock price.
But Coca Cola is still a hot star company on Wall Street, and the number of institutions that suggest buying Coca Cola shares is still higher than Pepsi. To some extent, people still recognize Coca Cola's leading position and risk resistance ability.