Monday, March 25, 2013

"If you want to be a Pepper, you'll need to pick up some shares of Dr. Pepper Snapple Group and stash them away."

Dow Jones Industrial Average 14,512.03 (Down) Week ending 03-22-2013

What do you think about some of these iconic brands? Dr. Pepper, 7-UP, Canada Dry Ginger Ale, Sunkist, Hawaiian Punch, A&W Root beer, Snapple, Country Time Lemonade, Hires Root beer, Crush Orange soda, Mott's Apple Juice, Clamotto, Orangina, YooHoo, Deju Blue Water, Nanctucket Nectars and a whole bunch more. Who is the company that owns all these brands?                

It is..............Dr.Pepper Snapple Group (Symbol DPS, $46.42).  

The company has a Return on Equity of 27.55% and and PEG ratio of 1.88. The price to growth ratio is a little higher than I like, but I think you could buy it on a little pull-in on the stock. As you have seen, I love beverage stocks and media-content and broadcasting stocks. DPS fits right into the same mold.

This 6 Billion dollar revenue company has plenty of room to grow with all these well-known brands. Last year, the company produced 145 Million dollars in Free Cash flow. Gross profit margins are 59.23% at the company. 

The company pays a 3.27% dividend to add to your returns. Earnings for 2013 are looking to be $3.07 per share and for 2014, $3.31 per share. The forward PE ratio on the stock is 15.08.

(Photo compliments of the Kerry Glenn collection)
The One Year TOTAL Return for the stock has been 19.73% and the Three Year Total Return has been 36.30%. These numbers are very good indicators of what type of annual return you can have with DPS, probably above a 15% return a year, to be conservative. I would like to purchase it a hair lower than where it is now.

What's new here? The move to healthier drinks. They are coming out with Hawaiian Punch Aloha Morning. Sounds refreshing!!

So, don't confuse this one with the other Peppers in your life!!!!
(Although, those guys made lots of money too and it is their 50th Anniversary.)
 Where did Einstein and Ghandi go?

But if the Beatles were here, they might do an ad like this:

"Hey Laddies, how would you like a nice Hawaiian Punch? Sure George!"

Now I've gone off on a tangent!

Back to the stock at hand: DPS.

Buy it, and be a Pepper!      

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