Shares of beverage giant
) hit a new 52-week high of $90.24 on Jun 20, 2014, recording an
year-to-date return of 8.5%.
Pepsi's shares have been on the rise as investors are encouraged
by Pepsi Spire launched last month. The new soda dispenser
revolutionizes the way carbonated beverages are served. Moreover,
the strong business momentum and consistent beat for the past few
quarters have provided an upside to the company's share price.
Last month, Pepsi unveiled the digital soda dispenser, Spire,
which is expected to directly compete with
The Coca-Cola Company
) Freestyle fountain machines, available since 2009.
Pepsi Spire is a touchscreen soda fountain that reportedly
) tablet or iPhone. Spire allows customers to make up to 1,000
personalized carbonated beverages by selecting their favorite Pepsi
brands, including Pepsi, Mountain Dew, Sierra Mist, Brisk Iced Tea
and SoBe Lifewater. (Read:
Pepsi Brings Coca-Cola Freestyle Rival
We believe that Spire also provides Pepsi an edge over
Keurig Green Mountain Inc.
) upcoming Keurig Cold brewers and
SodaStream International Ltd.
's soda makers. Keurig Green Mountain plans to launch its first
Keurig Cold machine in 2015, which will use pods to make sodas,
sports drinks and other beverages at the touch of a button. In
order to increase its brand power, Keurig has already partnered
Coca-Cola which will exclusively make Coca-Cola branded pods for
the cold beverage system. (Read:
Green Mountain Coca-Cola Close Deal
SodaStream allows consumers the flexibility to decide the amount
of carbonation, flavor, and sweetener in their drinks. We believe
Pepsi's Spire offers customers the best of both Keurig Cold and
Sodastream's carbonation drinks. Spire offers the same flexibility
as SodaStream's machines while Pepsi's name gives it the brand
power that Keurig Cold will enjoy.
Moreover, investors are encouraged by Pepsi's strong business
momentum for several past quarters. The Zacks Rank #3 (Hold)
company made a solid start to fiscal 2014 as the company beat the
Zacks Consensus Estimate for both earnings and revenues in the
first quarter of 2014. A strong snacks performance once again
offset weakness in beverages.
With the latest earnings beat, Pepsi has delivered four straight
positive earnings surprises with an average beat of 7.12%. Despite
difficult consumer spending environment, lower-than-expected
currency headwinds, aggressive marketplace investments, better
execution, lower taxes and productivity gains boosted profits in
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