Symbol of the Modern Stock Market

A stock market analyst can measure the progress of a country from the emerging world, by the scale of operations and presence of PepsiCo. Bottling units and the distribution chain of this company generate new jobs for people without specialized and advanced qualifications. Consumers everywhere, especially the young, revel at the modern values that PepsiCo’s brands reflect.

Stock market investors cannot afford to ignore PepsiCo’s ability to beat its main rival in emerging markets such as India. The subservience to Coca-Cola in the United States may be an entrenched fact of life for PepsiCo’s management, but they have reversed the position in foreign shores.

PepsiCo makes important contributions to national agriculture systems through its business of snack and convenience foods. Countless impoverished farmers have been able to transform their lives through technology, improved seeds, and buy-back arrangements with PepsiCo’s operations. This aspect is not fully appreciated because of the deserved glitter of the company’s brands. However, it does lend stability to PepsiCo’s stock market value at home, because the company is able to garner government and regulator support even in countries without capitalist democracies.

The PepsiCo story is not without blemishes for the stock market investor. The company’s franchise management systems may be weak with respect to the bottling units to which it ships concentrates. It has also failed to negotiate peace with pressure groups, and is subject to intermittent attacks. Though PepsiCo concentrates on its brands more than on corporate image, there is an inevitable dilution of the company value on the home stock market.

There are other more long term stock market concerns for PepsiCo, its brilliant record notwithstanding. Gradual lifestyle changes may hurt the company beyond recovery. Acquisitions such as Tropicana, which have better health profiles than the flagship brand, have not been ramped up fast enough. The company’s growth prospects are suspect on this account. Margins in bottled water will not meet the profit needs of investors accustomed to proprietary recipes.

PepsiCo shares have traded near the 52-week high of $65.90 in late August 2006, and this could be a good time for stock market investors to move on to greener fields.

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