Here’s an article I wrote for the Motley Fool titled, “Do Couponers Know Something We Don’t?” If you are not familiar with the Motley Fool, it is a website that focuses on providing investing news, analysis and commentary. As you may know from the New Here page, my professional background was in investing, so this topic is very familiar to me. In case you have any interest, please enjoy…
For the past several years, it has been hard to avoid the couponing trend. As someone who runs a freebie and coupon blog, FreebieFindingMom.com, I can attest to the popularity of coupons; however, the question is, can we learn something from couponers besides how to build a stockpile of laundry detergent, toilet paper and razors? You bet!
Some of the most highly coveted coupons are those offered by Procter & Gamble (NYSE:PG), PepsiCo (NYSE: PEP), Starbucks (NASDAQ: SBUX). If you would have invested in each of these companies over the past five years, you would have outperformed the S&P 500 easily. Here’s a closer look at the current investment prospects of each of these companies.
To achieve the consistent outperformance that Procter & Gamble has, it clearly knows how to innovate and launch new products. In an effort to enhance the company’s future growth prospects, in early June 2013 they announced a streamlining of their business units into four industry-based. This reorganization is intended to spur faster growth and a renewed focus on their leading businesses. This change is warranted considering the company’s sales growth has lagged competitor, Unilever. According to data compiled by Bloomberg Industries PG has averaged an annual sales growth of 2% over the past three years versus Unilever who has delivered 8.7%.
With Lafley back on board as CEO, a renewed industry-based focus, and continued cost cutting initiatives expected to result in $10 billion in savings through 2016, PG appears well position for the future.
Another company with exciting growth prospects is Pepsico. There are rumors that Pepsico is considering a buyout of SodaStream International (NASDAQ: SODA), the maker of DIY soda machines and syrups. Taking over a company famous for turning tap water into fizzy drinks appears to be a logical decision for the beverage and snack food products company and with $6.7 billion in cash it has the means to do so.
An acquisition would allow PepsiCo to diversify its operations and drive growth in a market that appears to be flourishing. SodaStream has achieved 33 percent annual revenue gain in the past five years and is projecting a $1 billion revenue target in 2016. With SodaStream machines in 6.5 billion households around the world, this appears to be a sustainable trend that will drive growth for PEP.
If PepesiCo needs a little advice on successfully entering a new market, perhaps they should look to Starbucks. Starbucks has beat the S&P 500 over the YTD, 1 year, and 5 year time periods and it does not appear to be simmering down.
One of the most promising growth opportunities for the company is in its at-home premium single-serve segment which is estimated to be an $8 billion market. With Keurig machines becoming as prevalent as microwaves in many homes, this presents Starbucks with significant growth opportunity. The company made a wise decision to license its beans and brand to Green Mountain Coffee Roasters (NASDAQ: GMCR) Keurig to participate in this growing market. Starbucks has not only partnered with the leader in single serve coffee, it has also developed the Verismo machine, a K-cup capable machine of its own.
PG, PepsiCo, and Starbucks remain solid long-term investment choices because these companies have been successful at reinventing themselves to adapt to a changing business environment whether that means bringing back a seasoned leader and reorganizing, contemplating an acquisition to gain exposure in a new market or partnering with a leader and developing innovations to compete in a new business.