Value in top consumer stocks: Pro

Two consumer discretionary stocks continue to offer upside beyond divdend yields, Kevin Dreyer of the Gabelli Funds said Tuesday.

"High margin, generate a lot of cash flow, have pricing power," he said, listing reasons why consumer discretionary names have been doing well. "They have done well in part because of that dividend play, but what we do that is a little bit different is that we look for catalysts that can surface value in the sector."

On CNBC's "Fast Money," Dreyer, who has $2 billion in assets under management, said that he liked PepsiCo and ConAgra.

Pepsi, whom Trian Fund Management's Nelson Peltz urged to buy Mondelez last week, could see stock price appreciation if it were to follow the investor's advice. Peltz also suggest that Pepsi could instead spin off its Frito-Lay division.

(Read more: Nelson Peltz calls on Pepsi to buy Mondelez)

The suggestion, Dreyer said, puts "pressure on management to deliver."

Dreyer also took a positive view of ConAgra.

"In the case of ConAgra, this is a company that's done a deal. They recently bought Ralcorp," he said. "This made them the leading private-label food manufacturer in the country."

Dreyer said that he expected "$300 million of synergies from that and generate double-digit earnings growth."

(Read more: Apple stock going to $600 per share, Paul Meeks says)

He also offered a third stock worth looking at.

"My favorite is probably Beam because we think it's a takeout and a great business," he said.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

Trader disclosure: On July 23, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Josh Brown is long AAPL; Josh Brown is long XLU; Josh Brown is long TGT; Josh Brown is long DD; Joe Terranova is long VRTS; Joe Terranova is long TRV; Joe Terranova is long AXP; Joe Terranova is long OXY; Joe Terranova is long EMC; Joe Terranova is long MS; Joe Terranova is long GS; Joe Terranova is long CRUDE OIL FUTURES; Steve Weiss is long BAC; Steve Weiss is long C; Steve Weiss is long MS; Steve Weiss is long GILD; Steve Weiss is short CAT; As of 7/22/13 Jon Najarian is long AAPL; Jon Najarian is long GLD ; Jon Najarian is long ABX; Jon Najarian is long NUGT; Jon Najarian is long BBRY; Jon Najarian is long PBR; Jon Najarian is long ITUB ; Jon Najarian is long WLL; Jon Najarian is long ZNGA.