Coca-Cola’s stock has long outperformed shares of Pepsico, said Jim Cramer on CNBC’s “Mad Money,” but it seems that Pepsi could soon give Coke a run for its money.
“One of the main reasons why I’ve preferred Coca-Cola over Pepsi is that because it doesn't make billions of dollars of snacks, it has less exposure to the grain complex, which had been in an endless spiral upwards, and the other reason is that it has more overseas exposure than Pepsico, where most of the world’s growth was coming from,” Cramer said, adding that things have changed in the past year.
Commodity prices have come down, Cramer said, meaning the price of grains and the cost of aluminum, plastics, glass and cardboard are all lower. While Pepsi does hedge a lot of these commodities, Cramer thinks they will benefit from the declines over time as the hedges roll over and are put on at lower levels.
Meanwhile, Pepsi’s slow overseas expansion has suddenly become a blessing, Cramer said. Coke has a huge presence in Western Europe, which continues to struggle with sovereign debt. Pepsi, on the other hand, has been incredibly slow to go to Europe.
In the end, Cramer thinks it could be time to swap out of Coke in favor of Pepsi. The risks of Coke at $75 a share have become too great while the rewards for Pepsi at $68 a share are tempting, he said.
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