By Peet Serfontein & Pritu Makan
Keurig Dr Pepper (KDP US) is a leading beverage company in the United States (US), known for its extensive portfolio of soft drinks, coffee, and specialty beverages. Formed in 2018 through the merger of Keurig Green Mountain and Dr Pepper Snapple Group, KDP has leveraged its diverse product range and innovative distribution strategies to become a major player in the industry. The company boasts iconic brands such as Dr Pepper, Snapple, and Green Mountain Coffee, alongside a wide array of partner brands.
The company's scalable business model provides a platform for future growth, with management remaining focused on its strong, balanced portfolio of leading, consumer-preferred brands with a proven ability to expand via innovation, renovation, and partnerships. The group also benefits from a flexible and scalable route-to-market network, with unique e-commerce expertise and a high-performing management team.
Technically, the consistent uptrend in the share price appears attractive and provides an opportunity to enter a long position, with sustained buying interest and positive sentiment likely to provide further upside potential.
The stock is also trading in a markup phase of the Wyckoff price cycle. This phase is characterised by growing market interest and strong buying pressure, which is encouraging.
Emerging upside momentum, according to the MACD indicator as well as the upwards movement of the On-balance Volume indicator, supports our bullish stance.
Share Information
| Share Code | KDP |
|---|---|
| Industry | Food, Beverage & Tobacco |
| Market Capital (USD) | 46.27 billion |
| One Year Total Return | 3.05% |
| Return Year-to-Date | 4.47% |
| Current Price (USD) | 34.12 |
| 52 Week High (USD) | 35.00 |
| 52 Week Low (USD) | 27.66 |
| Financial Year End | December |
| The stock remains above its 200-day simple moving average, which is considered bullish and suggests that the upward trend is strong |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 1.79 | 1.92 | 2.07 | 2.21 |
| Growth (%) | 7.49 | 7.54 | 6.86 | |
| Dividend Per Share (USD) | 0.83 | 0.88 | 0.93 | 0.98 |
| Growth (%) | 5.90 | 5.23 | 6.38 | |
| Forward PE (times) | 17.73 | 16.49 | 15.43 | |
| Forward Dividend Yield (%) | 2.58 | 2.71 | 2.88 | |
| Growth prospects remain attractive, with management recently highlighting that the group's consumer-centric innovation model has continued to resonate effectively with the market. | ||||
Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | LYB US -Buy (Continue to hold) | HD US - Buy (Continue to hold) | BALL US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 95.48 | 353.79 | 61.71% |
| Current | 98.26 | 363.69 | 63.25 |
| Movement | +2.9% | +2.8% | +2.5% |
|
A price at the upper range of a price distribution remains of interest. Crossed above its 200-day simple moving average. Fading downside momentum supports the trade.
Our profit target remains at $105. The trailing stop-loss is $94.10. Exit the trade by 2 October 2024. |
A developing symmetrical triangle pattern remains of interest. Remains above its 200-day simple moving average. Upside momentum supports the trade.
Our profit target remains at $395. The trailing stop-loss is $346. Exit the trade by 11 October 2024. |
A developing a broadening bottom pattern remains of interest. Remains above its 200-day simple moving average. Fading downside momentum supports the trade. Our profit target remains at $69. The trailing stop-loss is $60.30. Exit the trade by 7 February 2025. |
| Share Name and position | BME LN - Buy (Continue to hold) | HSY US - Buy (Continue to hold) | ADSK US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 456.53 | 192.67 | 243.51 |
| Current | 467.20 | 193.97 | 243.34 |
| Movement | +2.3% | 0.0% | -0.1% |
| A buy signal according to the Bollinger Band indicator remains of interest. Remains below its 200-day simple moving average - counter-trend strategy. Fading downside momentum supports the trade. Our profit target remains at £533. The trailing stop-loss is £436. Exit the trade by 6 November 2024. | Price remains above key long-term support. Testing its 200-day simple moving average and - a counter-trend strategy. The start of upside momentum supports the trade. Our profit target remains at $215. The trailing stop-loss is $185.20. Exit the trade by 1 November 2024. | A price that is building a base remains of interest. Remains above its 200-day simple moving average. Fading upside momentum remains a concern. Our profit target remains at $283. The trailing stop-loss is $228. Exit the trade by 23 August 2024. |
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