The Argument for Dumping the DOCTOR (Pepper)
July 22, 2008
– Comments (3) |
RELATED TICKERS: DPS
, KO
, PEP
The Entire Beverage Sector (and I exclude bottling companies or any company that isn't specifically a company that sells/provides drink formulas to bottlers) has been creamed into a smithereens this year.
There's something wrong when Coca Cola and Pepsi both have a large Snack Foods product line and yet have seen their stocks trade at or new 52 week lows since January.
Dr. Pepper Snapple Group hasn't produced a bad earnings report but has shown that it TOO is vulnerable to the same pressures of Coca Cola and Pepsi and unfortunately doesn't provide a dividend and doesn't really have a snack foods product line except maybe "MOTT's Apple Sauce."
But that's not the reason to dump the Doctor. No. DPS is far too young a stock to give up on purely on economic, consumer, volume purchasing concerns and input costs. Those types of things are essentially irrelevant when it comes to the overall picture of a stock.
The only reason that would truly motivate me to dump the Doctor for GOOD reason is if I happen to have a *handcuff* sitting on the bench. I happen to have such a handcuff in CCBEF.
Check CCBEF (Clearly Canadian's) chart. Based on the chart alone how could anyone argue against the growth rate of this stock? Trading around 70 cents a share near the beginning of the year to now trading at $1.21, this has been virtually the only SUCCESS story in the beverage industry this year...
Well...granted.... you could argue that Wim Bil Dan and other foreign beverage companies have done well this year. Fine.... But those stocks are *expensive* and frankly.... Besides a few water companies and such there isn't anything in the whole sector performing better than CCBEF.
CCBEF has also just received analyst coverage by Wallstreet Research and feel free to check out their report listed at www.clearly.ca.
Bottom line is this....
Go long on DPS for what?
Or Go Long on CCBEF for a potential doubling of your income next year?
CCBEF has a much larger expansion / growth potential than DPS. CCBEF has over $5 million of cash on hand to expand their business.
CCBEF has cut their costs and expect to end their transistion costs to Toronto by the end of 2Q.
CCBEF expects to start pushing their products to America for the first time real soon from now.
CCBEF is clearly an excellent *handcuff* sitting on the bench.
So why pass on the opportunity? Seriously..... Can someone explain to me why I am still invested in DPS and why I haven't a share in CCBEF? what the heck is wrong with making the swap?
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