If consumer spending is slowing, you wouldn’t know it by looking at PepsiCo stock (microsmallcap, micro small cap, micro stock, micro stocks, small cap stock, small cap stocks, editorial, prconnect, beverages, kombucha, healthy drinks, sports drinks, health drinks, healthiest drinks, boost shakes, nutrition drinks, ensure vs boost, boost vs ensure, low sugar drinks, healthy snacks, healthy food, bottled water, energy drinks, alcoholic drinks, dietary supplements, nutritional information, soft drinks, fruit juice, hot drinks, monster stock, monster beverage, health products, red bull stock) recent profits. The firm recently announced increasing revenue and profit growth, a flood of cash, and excellent sales volumes.
Due to solid overall performance until early September, management also boosted its 2022 projection. This outcome demonstrates that investors were correct to rush to PepsiCo stock (NASDAQ:PEP) for most of 2022. However, it is not too late for novice investors to consider purchasing this company.
Let’s look at three reasons why PepsiCo stock is still a good purchase.
- Volumes in PepsiCo’s categories are increasing.
PepsiCo reported a 9% year-over-year gain in revenue through early September, but that statistic understates the company’s scorching pace. Organic revenues increased 16% in the third quarter after adjusting for foreign exchange rate changes and divested goods.
This result shows an increase from the 13% rate seen in the year’s first two quarters. Pepsi is also at the top of the packaged goods business. For comparison, McCormick just posted a 6% rise in organic sales.
If you go further, you’ll find more reasons to be optimistic about PepsiCo’s prospects. True, sales volumes in its snacking business fell marginally. However, beverage volumes are up, and the price has risen. It is a positive indicator for the company that Pepsi can pass on greater expenses without losing market share.
- PepsiCo is increasing its profit margins.
PepsiCo’s finances are in order. When many rivals reported reductions, the gross profit margin remained stable, and the operating profit margin grew. This performance lends credence to management’s contention that PepsiCo’s dominating position in the sector enables it to sustain extremely high earnings.
In a conference call, executives said buyers gravitate toward trusted brands even as they seek to reduce costs elsewhere in their budgets.
- PepsiCo stock has a bright future.
PepsiCo’s previous 2022 prognosis was excellent, but it now seems to be much better. Management now expects organic sales to increase by 12%, up from 10% before. Revenue has increased by double-digit percentages for four consecutive quarters, and the business forecasts more good improvements.
Earnings are expected to rise by 10%, rather than the 8% forecasted by executives a few months ago. Sure, customers may become more frugal with their expenditure on snacks, meals, and drinks. However, Pepsi sees no sign of a decrease in demand.
These reasons point to Pepsi delivering another year of market-beating profits in 2022. Add in a dividend that is nearly expected to increase for the 51st time in a row in 2023, and you have all the components for great stock gains.
Investors cannot be guaranteed that PepsiCo will avoid any recession that may occur in the next quarters. In such a case, the prospects for growth and profitability would almost certainly deteriorate. However, investors should not be deterred from investing in a company that is gaining traction in multiple huge global food segments.
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Author Okoro Chinedu 
