Disclaimer: Leif Eriksen owns PEP in his Covestor Performance with Protection Model.
August 30, 2010: The cover of the August 30th issue of Barron’s might well have read “Abandon Hope All Ye Individual Investors Who Enter Here” (apologies to Dante Alighieri). First, Alan Abelson informs us that the deck is stacked against us, then Vito Racanelli tells us it’s not a stock picker’s market, and later on Jim McTague explains how the May 6th Flash Crash might have been rigged. What’s an independent investor to do? Follow the herd into the bond market? Find refuge in cash?
I have no intention of doing either. Why push money into an overheated bond market with yields less then available on blue chip stocks? Individual investors will be the first to get crushed when the professionals head for the bond exit doors. And you might as well put your money in your mattress as put it into money markets funds with short term interest rates approaching zero. No, I would rather park my money in the shares of well run companies with international franchises that pay a healthy dividend. Which leads me to today’s highlighted investment…
Pepsico (PEP) is a company that needs little introduction. But did you know that PEP gets 45% of its revenue from outside the U.S. and this international revenue will likely rise to over 50% within the next five years? Did you know that PEP is making significant investments in these markets, particularly China? Did you know that PEP has one of the best management teams in the CPG industry, led by Indra Nooyi? I could go on about the merits of the company and its brands but suffice it to say there are very few other places I would rather park my money while waiting to see what happens with the economy. And while I wait I get paid a 3% dividend as of August 30, 2010.
