Soft drinks may be a year-round indulgence but once the summer heat hits, those icy-cold beverages dripping with condensation become impossible to resist. And some of the best stocks in the soft drink sector may prove just as alluring to investors.
True, U.S. soft drink sales have fallen steadily for the past six years and now are at their lowest levels since 1996. Much of the slippage, which disproportionately hits the carbonated beverage segment, stems from a greater emphasis on healthier lifestyles. In recent years, soft drinks have been labeled as a prime cause of childhood obesity and tooth decay.
But even if health advocates demonize soft drinks as the kissing cousins of Big Tobacco, that doesn’t mean investors will take it on the chin. Even after decades-long crusades and tough new regulations against the tobacco industry, top companies like Phillip Morris (NYSE:PM) have blown away the S&P 500 because the consumer wants what he (or she) wants. And the company can keep raising prices to stay profitable.
For soft drink investors, making the “healthier” choice requires a far different calculation. Here are three stocks that are hot and three that are not:
- Coca-Cola . It’s no surprise that Coke’s investors have a lot to smile about – the company’s flagship Coca-Cola is still the No.1 brand in the industry. Even better, sales of Diet Coke last year displaced long-term second-place Pepsi. KO hit a new 52-week high of $68.77 on May 13 and delivers a 2.9% dividend yield.
- Hansen Natural Hansen cashes in on the hot natural soda, fruit juice and energy sports drink markets. Hansen’s brands range from Monster Energy to Peace Tea. Hansen is on a tear: Share prices have skyrocketed 95% since this time last year and the company hit a new 52-week high last Wednesday. And the trends look pretty good too: 10.5% above its 50-day moving average, and 26% above its 200-day MA.
- Dr. Pepper Snapple . Dr. Pepper is only one of the company’s premier brands: it also boasts 7Up, Crush, Schweppes, Sunkist, Hawaiian Punch and others. DPS shares are trading 19% above its 52-week low of $33.60 last September and just hit a new 52-week high of $42.44 on May 20. The stock is a shade above its 50-day MA and 7.33% over its 200-day MA.
- SkyPeople Fruit Juice . SkyPeople produces and markets fruit beverages, concentrates, cider and other fruit products. Sky is down nearly 63% from its 52-week high of $6.59 last August. It set a new low of $1.95 on June 1. It is down 29% from its 50-day moving average and 44% below its 200-day MA.
- Jamba . Jamba Juice owns or franchises a total of 743 food and beverage retail stores in the U.S. and Bermuda. At around $2.15, Jamba seems like a bargain pick. But as with most bargains, this stock is not without risk. The company has been struggling within its niche and analysts forecast a 10-cent-a-share loss for this year. Jamba is about 7% below its 50-day MA and 5% below its 200-day MA.
- Leading Brands . Leading Brands focuses on natural juices and waters and its brands include TrueBlue and Stewart’s Fountain Classics. The company initiated a massive stock repurchase program to give the stock a shot in the arm. Still, Leading Brands has had a tough three weeks, slipping from $3.70 on May 13 to $2.60 on Monday – a loss of nearly 30%.