We recently compiled a list of the 10 Best Cookies and Crackers Stocks to Buy. In this article, we are going to take a look at where PepsiCo, Inc. (NASDAQ:PEP) stands against the other cookies and crackers stocks.
The Global Cookie and Cracker Market
The global cookie and cracker market was valued at $100.2 billion in 2023 and is expected to grow to $122.45 billion by 2030, growing at a compound annual growth rate of 3.7% during the forecast period between 2024 and 2030. Region-wise, North America dominates the market with the United States and Canada as its top markets. With significant markets in the United Kingdom, Germany, and France, Europe follows. Simultaneously, Asia Pacific is depicting rapid growth with significant market expansion in countries such as China and India.
What is the Global Snacking Industry Looking Like?
According to Mondelēz International’s annual State of Snacking Report 2023, consumers continue to snack strong as 6 in 10 global consumers surveyed for the last 5 years have been consistently of the opinion that they tend to eat many small meals throughout their days instead of few large ones while young people look forward to the snacks in their day, more as compared to the meals. Younger consumers tend to snack once or more a day. Across all ages, the majority have ritualized snack time as they consume a snack at a special moment or time of the day.
Consistent snack spending is evident from the fact that two-thirds of consumers have not made significant changes to their spending on snacks although they are more conscious of price. Recently, consumers have cut back spending on non-essential items which has negatively impacted sales for Starbucks and McDonald’s. However, the threat doesn’t seem major to the snacking industry as snacking giants still see snacking as a large, attractive, and durable category that continues to grow in importance with consumers.
A piece of important news surfacing in the market just before the year’s end, as reported by CNBC, is that the Oreo maker has made a preliminary takeover approach for Hershey according to those familiar with the matter. The company had previously made a takeover bid for Hershey in 2016 which Hershey’s board unanimously rejected. The acquisition, if it takes place, is going to result in one of the biggest confectionery companies globally. While the combined business could be a huge deal, the question about it competing against the recent Mars’ acquisition of Kellanova which is expected to materialize in the coming year, is circulating all around. This acquisition is a great deal in the global snacking market as well since it ranks among the top 10 global food and beverage mergers and acquisitions since 1995, as revealed by Dealogic.
Our Methodology:
In order to compile a list of the 10 best cookies and crackers stocks to buy, we went through stock screeners, relevant ETFs, and media reports to make a list of relevant stocks. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best cookies and crackers stocks to buy have been arranged in ascending order of their hedge fund holders, as of Q3.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up of a glass of a refreshing carbonated beverage illustrating the company’s different beverages.
PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
PepsiCo, Inc. (NASDAQ:PEP) is a renowned global food and beverage company. The firm offers a complementary portfolio of brands, including Lays, Cheetos, Doritos, Pepsi-Cola, Gatorade, Mountain Dew, Quaker and SodaStream. The firm offers cookies and crackers through its various brands including Grandma’s as well as Gamesa, the leading cookie and cracker Hispanic brand in the US grocery channel.
PepsiCo, Inc. (NASDAQ:PEP) leverages its global scale and reach to spark joy and create more smiles. The firm’s product portfolio includes a wide range of enjoyable foods and beverages, including many iconic brands that generate over $1 billion each in estimated annual retail sales. PepsiCo’s products are enjoyed by consumers over one billion times a day in more than 200 countries and territories across the globe. The global beverage and convenience food market presents the firm with a promising opportunity to further grow.
Despite tough conditions including business disruptions due to rising geopolitical tensions in certain international markets and subdued category performance trends in North America, the firm closed a resilient third quarter of 2024. The quarter was marked with 1.3% organic revenue growth, 110 basis points expansion in core gross margin, and 75 basis points expansion in core operating margin versus the previous year. While consumers remain choiceful and value-conscious due to inflationary pressures, PepsiCo, Inc. (NASDAQ:PEP) continues to accelerate its existing productivity programs by expanding automation at its plants, warehouses, and distribution centers, advancing digitalization across its organization, maximizing labor efficiencies, and minimizing areas of waste.
While a strong pipeline of productivity initiatives is in place, the firm expects inflationary pressures to moderate versus the preceding year. Although the firm has been through multiple challenges since 2019, the long-term resilience of its categories and businesses is evident from the fact its net revenue has grown to more than $90 billion and it remains on track to deliver more than 45 percent core USD earnings per share growth in 2024 versus 2019.
Overall PEP ranks 2nd on our list of the best cookies and crackers stocks to buy. While we acknowledge the potential of PEP as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.