Why Invest in Individual Stocks?
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In the chart shown, we see that companies like Pepsi and Coca-Cola had significantly lower performance compared to others like Campbell's. Although these companies are part of the broader media and entertainment industry, there’s a clear difference in their returns. This shows that individual stocks can still significantly outperform or lag behind the trend even when the industry moves in a general direction.
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Individual stock investing is feasible because of data science
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There is a moderate positive relationship between a company’s net income and its market capitalization, reflected by an R-squared value of 0.81. Pepsi (PEP) and Coco-Cola (KO) perform above the trendline, while Phillip Moriis (PM) is below
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An example for the price regression model: price vs. eps
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With an R-squared value of 0.12, the model shows a very weak link between EPS and stock price in the Food, Beverage, and Tobacco sector. The coefficient of 6.37 indicates that for every $1 rise in EPS, stock prices tend to increase by about $6.37. Additionally, the intercept of $63.12 suggests that even companies with no earnings could still hold a market value around $63.12, likely due to factors like brand reputation and market presence.
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Industry (SP500) Market Cap Trend
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From 2017 to 2023, the total market capitalization of the industry is slighty higher than in 2017 while increasing and decreasing throughout the years
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Industrial Trend - Choose Your Own KPIs (Industry Median)
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Over the course of the 6 years the PE ratio decreased by 5 but had a huge drop in 2018 below 15 and then quickly rose back up to 23 the year after. From 2019 to 2022 it was stable around 23.5
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Largest Retailers by Market Cap 2023, US SP500
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Leading the list are The Coco-Cola Company, Pepsi Corporation, and Phillip Morris International., which show significantly higher valuations compared to others like Hershey and General Mills. This highlights how a few leading companies control a large portion of the industry's overall market value.
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Stock price vs. earnings per share (EPS) for SP500 retailing companies
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The chart visualizes the relationship between stock price and earnings per share (EPS) for SP500 retailing companies across different years. Despite market fluctuations, a strong positive correlation between stock price and EPS is observed.
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Individual Stock Analysis
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PepsiCo, Hershey, and Coca-Cola show different growth patterns across key financial metrics. PepsiCo stands out with consistently high EPS and strong stock price growth, peaking at over $230 before settling at $186.44 in 2023. Hershey, while smaller, has shown impressive growth in both stockholder equity and earnings, with a steady increase in stock price over the years. Coca-Cola, on the other hand, has maintained stable but slower growth, with modest increases in both EPS and stock price. Both PepsiCo and Hershey have reduced their shares outstanding over time, likely boosting shareholder value, while Coca-Cola’s share count has remained steady. Overall, PepsiCo appears to be the strongest performer, Hershey shows solid momentum, and Coca-Cola continues to offer reliable but slower-paced growth
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Coco-Cola Financial Health in Short & Long Terms
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This chart examines Coco-Cola's financial health metrics from 2017 to 2023, including the current ratio, financial leverage, liability-to-asset ratio, and long-term debt ratio. The current ratio ranged from 1.3 to .76 in its lowest year and ended 3 consecutive years around 1.14, indicating stable short-term liquidity. Financial leverage peaked in 2018 but has been declining since then, suggesting improved capital structure management. Similarly, the liability-to-asset ratio stayed relatively stable around 0.75, and the long-term debt ratio, although it rose during the pandemic, gradually decreased by 2023
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Coco-Cola 2018 Surge
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The chart tracks The Coco-Cola company financial performance from 2017 to 2023, highlighting metrics such as net income, total revenue, net margin, and return on assets (ROA). After its surge in 2018, Coco-Cola increased again the following year and then decreased and slowly increased to its peek in 2023. After 2018 spike it has been more stable.
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Pepsi CO Fundamental Analysis
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PepsiCo’s total revenue shows consistent growth from 2017 to 2023, rising from $63.5 billion to $91.5 billion. Despite a spike in net income in 2018, profitability has been more stable in recent years, with net income reaching $9.2 billion in 2023. The company’s current ratio has steadily declined since 2017, indicating tighter short-term liquidity. Meanwhile, the liability-to-asset ratio has remained stable around 0.81–0.85, suggesting PepsiCo maintains consistent leverage levels. Overall, the company demonstrates strong top-line growth with stable financial health, but it faces some pressure on liquidity management.
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Industry (SP500) Market Cap Trend
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This chart compares the financial trends of different Consumer staple industry segments within the SP500- from 2017 to 2023. The Soft Drinks sector showed the most significant growth in both market capitalization and cash flow, being the leader in all years in total market cap and in 2022 and 2023 in cash flow. Distillers and Vintners does not have very good financials
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