Latest news with #KeurigDrPepperInc
Yahoo
31-05-2025
- Business
- Yahoo
An Intrinsic Calculation For Keurig Dr Pepper Inc. (NASDAQ:KDP) Suggests It's 50% Undervalued
Using the 2 Stage Free Cash Flow to Equity, Keurig Dr Pepper fair value estimate is US$67.07 Current share price of US$33.67 suggests Keurig Dr Pepper is potentially 50% undervalued Our fair value estimate is 74% higher than Keurig Dr Pepper's analyst price target of US$38.62 How far off is Keurig Dr Pepper Inc. (NASDAQ:KDP) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$2.27b US$2.80b US$3.14b US$3.41b US$3.55b US$3.68b US$3.80b US$3.92b US$4.05b US$4.17b Growth Rate Estimate Source Analyst x5 Analyst x5 Analyst x3 Analyst x1 Analyst x1 Est @ 3.55% Est @ 3.37% Est @ 3.24% Est @ 3.15% Est @ 3.09% Present Value ($, Millions) Discounted @ 6.4% US$2.1k US$2.5k US$2.6k US$2.7k US$2.6k US$2.5k US$2.5k US$2.4k US$2.3k US$2.2k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$24b The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.9%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$4.2b× (1 + 2.9%) ÷ (6.4%– 2.9%) = US$124b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$124b÷ ( 1 + 6.4%)10= US$67b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$91b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$33.7, the company appears quite good value at a 50% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Keurig Dr Pepper as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.4%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Keurig Dr Pepper Strength Debt is well covered by earnings. Dividends are covered by earnings and cash flows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Beverage market. Opportunity Annual earnings are forecast to grow for the next 3 years. Trading below our estimate of fair value by more than 20%. Threat Debt is not well covered by operating cash flow. Annual earnings are forecast to grow slower than the American market. Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For Keurig Dr Pepper, there are three important aspects you should further research: Risks: For example, we've discovered 3 warning signs for Keurig Dr Pepper (1 is a bit unpleasant!) that you should be aware of before investing here. Future Earnings: How does KDP's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
29-03-2025
- Business
- Yahoo
Keurig Dr Pepper Inc.'s (NASDAQ:KDP) Intrinsic Value Is Potentially 89% Above Its Share Price
Keurig Dr Pepper's estimated fair value is US$63.77 based on 2 Stage Free Cash Flow to Equity Keurig Dr Pepper's US$33.74 share price signals that it might be 47% undervalued Analyst price target for KDP is US$37.76 which is 41% below our fair value estimate How far off is Keurig Dr Pepper Inc. (NASDAQ:KDP) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Believe it or not, it's not too difficult to follow, as you'll see from our example! Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$2.24b US$2.80b US$3.16b US$3.29b US$3.41b US$3.52b US$3.63b US$3.73b US$3.84b US$3.95b Growth Rate Estimate Source Analyst x4 Analyst x5 Analyst x3 Analyst x1 Est @ 3.44% Est @ 3.23% Est @ 3.09% Est @ 2.99% Est @ 2.91% Est @ 2.87% Present Value ($, Millions) Discounted @ 6.3% US$2.1k US$2.5k US$2.6k US$2.6k US$2.5k US$2.4k US$2.4k US$2.3k US$2.2k US$2.2k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$24b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.8%. We discount the terminal cash flows to today's value at a cost of equity of 6.3%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$4.0b× (1 + 2.8%) ÷ (6.3%– 2.8%) = US$115b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$115b÷ ( 1 + 6.3%)10= US$63b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$87b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of US$33.7, the company appears quite good value at a 47% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Keurig Dr Pepper as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.3%, which is based on a levered beta of 0.814. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Keurig Dr Pepper Strength Debt is well covered by earnings. Dividends are covered by earnings and cash flows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Beverage market. Opportunity Annual earnings are forecast to grow for the next 3 years. Trading below our estimate of fair value by more than 20%. Threat Debt is not well covered by operating cash flow. Annual earnings are forecast to grow slower than the American market. Although the valuation of a company is important, it ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. What is the reason for the share price sitting below the intrinsic value? For Keurig Dr Pepper, we've compiled three further aspects you should consider: Risks: Case in point, we've spotted 3 warning signs for Keurig Dr Pepper you should be aware of, and 1 of them is significant. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for KDP's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
04-03-2025
- Business
- Yahoo
Keurig Dr Pepper (KDP): Among the Best Sugar Stocks to Buy According to Analysts
We recently published a list of . In this article, we are going to take a look at where Keurig Dr Pepper Inc. (NASDAQ:KDP) stands against other best sugar stocks to buy according to analysts. The global food and beverage sector depends heavily on the sugar industry, which supplies a vital component for everything, from packaged meals and drinks to confectionery products. While traditional sugar production has been a reliable source of income for many years, new developments in alternative sweeteners, regulatory restrictions, and consumer tastes have changed the market and created new avenues for expansion and investment. The demand for sugar remains high despite fluctuations in the global supply. The most recent World Agricultural Supply and Demand Estimates (WASDE) study projects that reduced cane sugar yields will cause U.S. sugar output to drop to 14.39 million short tons in the 2024–2025 season. Similarly, Mexico's sugar output forecast has been lowered, mostly because of lower harvest quantities and a slower rate of sucrose recovery. However, rising middle-class populations in developing nations, increasing consumption of processed foods, and the ongoing demand for sugar-based goods, all contribute to the world's rising sugar consumption. Nevertheless, conventional sugar production is no longer the only focus of the sugar industry. A shift is occurring as health-conscious consumers actively seek healthier alternatives. About 35% of all non-alcoholic beverage releases in the last year featured no-sugar or low-sugar formulations, according to a GlobalData report, indicating that sugar reduction claims have taken center stage in the beverage industry. Major food and beverage companies have been forced to diversify as a result of this change, looking into sugar substitutes and natural sweeteners. As a result, companies are keen to meet the changing demands of a more health-conscious population, which is leading to increased investment in the sugar sector. Therefore, companies are coming up with innovative ideas and solutions in response to these shifts, such as plant-derived sugar substitutes or artificial sweeteners. Large multinational corporations are growing their lower-sugar product lines, indicating a more significant change in the sector. In addition to food and beverages, sugarcane and sugar beets are essential to the biofuel sector. More than half of Brazil's sugarcane harvest is used to produce ethanol, making it the world leader in sugar-based ethanol production. This need is only likely to increase in the years to come. Sugar is a renewable energy source that is becoming increasingly important as the ethanol industry grows. Hence, sugar is an essential part of the global economy, extending beyond food and beverages, as sugar compounds are utilized extensively in industrial, medicinal, and cosmetic products. While certain companies integrate sugar-based components into a wider range of products, others make significant profits from conventional sugar production. Thus, selecting the correct stocks is essential for investors hoping to profit from the rapidly evolving sugar sector. To compile our list of the 7 Best Sugar Stocks to Buy, we first identified companies operating in the sugar industry, including those involved in sugar production, sweeteners, and sugar-related ingredients. We focused on stocks with strong market capitalization and a notable presence in the sector. Next, we analyzed institutional interest by determining the number of hedge funds which hold a stake in the company, as of Q4 2024. Hedge fund ownership data was sourced from Insider Monkey's hedge fund database, which tracks the activity of over 1,000 hedge funds. A higher number of hedge fund holders often indicates confidence in a company's growth potential and stability. To assess the potential upside, we gathered analyst forecasts from credible sources. The highest projected upside for each stock was taken into account to ensure an accurate representation of growth expectations. Finally, we ranked the stocks based on their potential upside in ascending order. Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (). A conveyor belt filled with assorted K-Cup pods, ready for packaging. Upside Potential: 7.33% Number of Hedge Fund Holders: 39 Keurig Dr Pepper Inc. (NASDAQ:KDP) has made a name for itself in the beverage sector by providing a diverse range of products, including coffee, flavored beverages, and soft drinks. A combination of strategic acquisitions, increased distribution efforts, and innovation has allowed the company to maintain its leading position in a cutthroat market. Given this, Keurig Dr Pepper is listed among the 7 best sugar stocks to buy according to analysts. With a noteworthy 10% increase in Q4 revenue, Keurig Dr Pepper Inc. (NASDAQ:KDP)'s U.S. Refreshment Beverages division has been one of the main drivers of its growth. With the help of clever marketing strategies and the launch of new flavors like Dr Pepper Blackberry, the flagship brand, Dr Pepper, has maintained its market share growth. Furthermore, KDP's premium brand Bai has expanded its market reach by offering fruit-based choices, which have improved the company's standing. Another key factor in Keurig Dr Pepper's success has been its strategy to expand its distribution network. The company has incorporated brands including GHOST Energy, an energy drink, and Electrolit, a hydration-focused beverage, into its direct-store-delivery (DSD) system. While GHOST Energy gives Keurig Dr Pepper Inc. (NASDAQ:KDP) a competitive edge in the rapidly growing energy drink market, Electrolit is being positioned strategically for entry into mainstream retail. In addition to broadening KDP's sources of income, these acquisitions give the company access to rapidly growing markets with significant potential. Overall, KDP ranks 4th on our list of best sugar stocks to buy according to analysts. While we acknowledge the potential of KDP, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KDP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
22-02-2025
- Health
- Yahoo
The Ginger Ale Brand That Has Been In A Surprising Amount Of Legal Trouble
Ginger ale is the oldest soda in America, and the most renowned name is Canada Dry. Since 1904, this brand has been known for its crisp, caffeine-free ginger soda that can be enjoyed on its own or as the perfect cocktail mixer. It might be a treat, but have you ever noticed the distinct lack of ... ginger? For instance, ginger in tea and cold-pressed juices often has a strong taste that opens up the sinuses, but ginger ale doesn't have that effect. It's not just the sugar — Canada Dry has less than 2% of ginger extract in its product. It'd be more accurate to compare ginger ale to lemon-lime sodas like Sprite, which have pretty much all the same ingredients like citric acid, carbonated water, and high fructose corn syrup. It wasn't always this way. Vintage bottles of Canada Dry indicated the use of real sugar and ginger in the recipe. Unfortunately for the company, consumers noticed the lack of ginger in the modern product, and it cost them some big bucks. There have been multiple class-action lawsuits filed against Canada Dry for concerns regarding false or misleading advertisements. Read more: 15 Popular Diet Sodas, Ranked Worst To Best Plaintiffs of a 2018 class action settlement, George, et al. v. Keurig Dr Pepper Inc., alleged that Canada Dry's "Made from Real Ginger" label was misleading because the product contained less than 2 parts per million of a ginger flavor extract. At the same time, a Fitzhenry-Russell, et al. v. Keurig Dr Pepper Inc. case helped to argue that Canada Dry led the plaintiffs to spend money they wouldn't have spent otherwise — thinking that they were getting the health benefits of ginger root for drinking ginger ale "Made from Real Ginger." Keurig Dr Pepper was innocent of claiming its product had ginger-related health benefits, but it was guilty of misleading advertising because there wasn't enough ginger in the product to constitute the "Made from Real Ginger" label. The court ordered that this statement be removed from all Canada Dry cans, but phrases like "real" or "natural" ginger could be used as long as words like "taste," "extract," or "flavor" followed. Simply put, Canada Dry contains ginger extract, not plain ginger. A 2024 lawsuit aimed to tackle Canada Dry for its labeling once again, this time bringing in Schweppes, too. The FDA orders that artificially flavored products must state that they're artificially flavored in clear sight on the label. Plaintiffs in Elliot v. Keurig Dr Pepper Inc. alleged that they lost money in paying a premium price for a product they were unaware had artificial ingredients. Perhaps we'll spot some new Canada Dry labels out there soon! Read the original article on Chowhound.
Yahoo
08-02-2025
- Business
- Yahoo
Keurig Dr Pepper (KDP) Among the Best FMCG Stocks to Buy According to Hedge Funds
We recently published a list of . In this article, we are going to take a look at where Keurig Dr Pepper Inc. (NASDAQ:KDP) stands against other best FMCG stocks to buy according to hedge funds. Consumer staples refer to essential daily-use products such as packaged food, toothpaste, and dish detergent. These products often run out quickly off the supermarket shelves and are considered 'defensive' because consumers continue to purchase these necessities even during economic downturns. Moreover, consumer staple companies are mostly mature dividend payers. On December 10, 2024, Ben Shuleva, Fidelity Sector Portfolio Manager shared his outlook for the sector in a report published on Fidelity Investments. The consumer staples sector had a positive year but lagged behind the broader market due to investors favoring higher-growth stocks. The high interest rates and concerns about GLP-1 weight-loss drugs affecting food consumption also impacted performance negatively. However, despite these challenges, the sector still posted strong absolute gains. Compared to the S&P 500 index the consumer staple sector gained 16.7% on a year-to-date basis as of December 9, whereas the S&P 500 index gained 26.9% during the same time. READ ALSO: and . Ben Shuleva from Fidelity Investments anticipates a return to normalcy for the consumer staples sector in 2025. He suggests this based on a broadly stable economic environment with healthy employment and steady real wage growth. In addition, the Fed is expected to begin cutting interest rates, which could boost dividend-paying stocks. Lastly, consumer spending has remained strong and is expected to remain resilient in 2025, thereby indicating positive sales growth for the sector. Shuleva anticipates that these factors will lead the sector to outperform the broader market in 2025. However, there could be a few uncertainties that could hamper the growth trajectory. The new presidential administration may introduce changes in tariff policies, which could affect certain consumer staples products. Although most consumer staples are manufactured domestically, so the direct impact of tariffs might be limited. Moreover, a strengthening US dollar can negatively affect consumer staples companies with international operations by reducing their foreign earnings when converted back into dollars. Shuleva emphasizes focusing on core fundamentals when investing in consumer staple companies, such as those operating in favorable market structures and maintaining strong underlying growth profiles. To complete the list of the 12 best FMCG stocks to buy according to hedge funds, we used the Consumer Staples Select Sector SPDR Fund and Vanguard Consumer Staples ETF. We selected pure-play Fast-Moving Consumer Goods-producing companies from the holdings of these two ETFs and ranked them in ascending order of the number of hedge funds that held stakes in them at the close of the third quarter. The number of hedge funds was sourced from Insider Monkey's third-quarter 2024 database. Why do we care about what hedge funds do? 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 (). A conveyor belt filled with assorted K-Cup pods, ready for Dr Pepper Inc. (NASDAQ:KDP) is a leading non-alcoholic beverage company in North America. It produces and sells both hot and cold drinks, including sodas such as Dr Pepper, and Canada Dry, juices like Mott's, coffee from Green Mountain Coffee Roasters, and more. The company also makes the Keurig brewing system, which allows people to make single cups of coffee using K-Cup pods. On January 17, Lauren Lieberman, analyst at Barclays maintained a Buy rating on the stock, while keeping the price target of $36. Oakmark Select Fund in its fourth quarter investor letter for 2024 stated they like the soft drink portfolio and impressive track record of the volume and market share growth. During the fiscal third quarter of 2024, the company increased its net sales by 2.3%, with net income growing 18.9% year-over-year. The US refreshment beverages segment was a notable contender with a growth of 5.3%, driven by volume/mix growth and higher prices. It is one of the best FMCG stocks to buy right now. Oakmark Select Fund stated the following regarding Keurig Dr Pepper Inc. (NASDAQ:KDP) in its : 'Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of North America's leading beverage companies, with dominant positions in single-serve coffee and flavored soft drinks. The soft drink portfolio has an impressive track record of volume growth and market share gains. We believe this performance can continue due to favorable demographic trends, brand strength, and distribution advantages. Recently, weakness in the Keurig coffee division caused the stock price to come under pressure. However, we believe these industry-wide challenges will prove transitory because coffee remains a popular beverage. Keurig's coffee division is poised to capitalize on this demand with the largest installed base of single-serve brewers and ample runway to increase household penetration. At the current quote, the market ascribes minimal value to Keurig. We were happy to purchase shares in this above-average business at a discount to the market multiple, other beverage peers and private market transactions.' Overall, KDP ranks 9th on our list of best FMCG stocks to buy according to hedge funds. While we acknowledge the potential of KDP to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KDP but that trades at less than 5 times its earnings, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
