The All-American Soda Stock That’s A Real Thirst-Quencher For Bargain Hunters

30‑Second Take

Why now? PepsiCo is about as far from an under-the-radar stock as you can get. It’s well-known as one of the most recognizable brands globally.

It’s a staple on supermarket shelves, refrigerators, and bars and restaurants worldwide. You may even have a can in your home or office right now.

What you might not know is that it’s also trading near a multi-year low with a favorable price-to-earnings ratio of 16.6% (PEP stock averages 20.9%). 

The bottom line? PEP stock is undervalued. If you’ve been looking to get a foot in the door with a solid consumer brand and plan to stay the distance, now could be that time.

Trade Setup

Time frame: Swing to medium-term
Edge type: Momentum breakout

Snapshot Table

Chart

5-Day Synopsis: Price action over the last five sessions could be best described as bumpy. PEP stock started the week on a brighter note but has slipped lower as the days have progressed.

Average session volumes have also been noticeably lower, with technical indicators leaning bearish.

That’s good news if you’re bargain-hunting and looking for an in on a global brand at a value rate.

Bull Case 

Core thesis: A food, beverage, and snack company, PepsiCo has several brands under its umbrella.

As well as its namesake Pepsi cola drink, other brands include Mountain Dew, Lipton, and Gatorade, the chip brands Cheetos, Lay’s, and Doritos, and breakfast favorites Quaker Oats and Cap’NCrunch.

It has made moves to expand its healthier offerings with the recent acquisition of prebiotic soda brand Poppi and the dip maker Sabra.  

Catalysts: While PepsiCo’s most recent earnings report was a little lackluster, PEP stock is a strong long-term prospect and is trading at a bargain price.

While organic sales growth was just 1% year-on-year, the shift towards healthier options adds diversity to the product line and expands growth potential.

The current price makes PEP a value buy with a forward PE of 16.6. 

Valuation upside: Analyst price targets run from a low of $110 to a high of $169. The average estimate is currently tracking at $149.70. 

Technical tailwind: PEP’s long-term outlook is bullish thanks to its growing portfolio, strong balance sheet, and long-term investments.

Bear Case 

Key risk: Volatility in commodity prices is a key risk for all food manufacturers, with the potential for additional pressure on margins from retaliatory trade tariffs and high levels of inflation compounding the problem.

In April of this year, PepsiCo cut its profit forecast for 2025 due to those rising costs.

Macro/sector headwinds: Consumer demand for traditional soft drinks is shifting towards healthier alternatives.

Adding to this pressure, some countries – including many key markets in the EU- are debating introducing (or have already introduced) legislation to impose a sugar tax on some food and beverage items, along with restrictions on marketing and advertising for products with a high sugar or fat content in a bid to boost public health. 

Competitive threat: PepsiCo faces consistent competition from The Coca-Cola Company and brands such as Nestle.

Coca-Cola is a strong innovator and has a robust global distribution network. It was an early pioneer of the sugar-free movement, highlighting its ability to spot a trend before its rivals.

PepsiCo may find it hard to match this level of innovation and could be behind the curve with new product development.

Own or private-label food and beverage offerings from retailers such as Walmart could also pose a threat as they go after budget-conscious shoppers. 

Crowded-trade concern: If higher inflation and commodity costs continue to squeeze margins, a rapid rotation out of margins could trigger a sharp downside.

Quick Checklist 

✅ Thesis still valid after today’s close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (June 19, 2025)

Deep‑Dive Links

• Q1 2025 Earnings Report 

• Analyst Ratings and Price Targets

• Short Interest Data

• Company Profile and Investor Relations

That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!

Best Regards,
—Noah Zelvis
Everyday Alpha