Stephen Powers, UBS household products analyst, told CNBC's "Squawk on the Street" on Tuesday that Coke and Pepsi have good fundamental trends, and foreign exchange headwinds are easing.
"We're seeing a bit of sequential easing in the FX environment, which I think in conjunction with the cost savings, provides some upside to current estimates," Powers said.
John Faucher, JPMorgan senior beverages analyst, agreed.
"Investors have ignored these stocks the past three or four years, more Coke than Pepsi, because FX has really hurt the underlying results. As the FX rolls off, earnings growth will accelerate," said Faucher.
Both analysts spoke a day after the stocks hit all-time intraday highs.
When it comes to potential headwinds of the introduction of soda taxes and reduced consumption of soft drinks, both analysts agreed that maintaining a diversified portfolio of businesses will be the key to remaining competitive.
"I think the carbonated soft drink volume decline trend is real, but there's still revenue opportunities. As you look across the portfolio, there's great margin opportunities as they realize those revenues and push on the cost savings that we talked about earlier," said Powers.
Of the two companies, both analysts said Pepsi's portfolio is better diversified, while Coke still has some work to do.
"Coke's portfolio needs to change more rapidly. Pepsi has a much better developed non-[carbonated] portfolio. You could see Coke get more active there," said Faucher. He added that these companies have moved away from mergers and acquisitions after the recession, but that as numbers improve M&A is a possibility.
"Earnings growth is better. The cash flow should get better. I wouldn't be surprised if we saw a step up in M&A over the next year or so," Faucher said.