Throughout the last year, Pepsi's (PEP) stock trended lower. On April 24, the firm triggered selling pressure after it posted first-quarter results. It also cut its guidance, citing global trade uncertainties. Coca-Cola's (KO) stock fell in sympathy to Pepsi’s share decline.
Pepsi posted a 10% drop in operating profits. CEO Ramon Laguarta expects volatility to continue, especially from a macroeconomic viewpoint. For fiscal year 2025, Pepsi’s organic revenue will grow in the low-single-digit percentage. However, the total cash returns will continue through share buybacks and dividends.
Pepsi has strong management who will navigate the supply chain, despite higher costs from tariffs.
IBM (IBM) is at risk of breaking below the $200 support line in the next one or two quarters. The company posted Q1 weakness in the Consulting and Infrastructure segments. They are both sensitive to macroeconomic conditions. Value investors may pick up IBM stocks at current levels, betting that software growth will improve.
IBM is confident in its capital structure and liquidity. For example, it proved that it could allocate its capital effectively over the last five years. To overcome the uncertain macro environment, IBM will sustain high levels of liquidity. That will give management the flexibility to invest in the business, increase returns to shareholders, or acquire companies at low prices.
