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Undervalued Pepsi Is a Compelling Opportunity

This wide-moat company offers a 3%-plus dividend yield, and we forecast 3% sales growth.


Sonia Vora: We think shares of Pepsi offer a compelling opportunity for long-term investors, given a more than 10% discount to our valuation combined with a 3%-plus dividend yield.

In our view, the firm's formidable portfolio of leading beverage and snack brands has helped it entrench itself in retailers' supply chains and secure valuable shelf space for its offerings. These retail relationships, combined with economies of scale in manufacturing and distribution, underpin our view of Pepsi's wide economic moat.

Sonia Vora does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.