PepsiCo has seen its shares fall flat over the last three years and worse, it significantly trails its rival Coca-Cola in performance over the last year. Shares of Pepsi are lower by around 8% year-to-date and down 16% over the last 12 months. While its rival has seen shares rise by around 7% year-to-date despite falling a bit over the last 12-months. The analyst community are no fans either. According to Bloomberg data, Pepsi has the equivalent of 8 buys, 17 neutrals and one sell rating. The average price target is $154.09 for an upside expected gain of 9.8%. Meanwhile Coca-Cola, the drink of choice by such notables like Warren Buffett and Donald Trump, has 29 buy ratings and only 3 neutral calls. The upside analyst target is 18% higher than current levels at $78.38. It’s almost no contest as to whom the street prefers. However, when looking at price action it appears Pepsi gives the investor a better opportunity at current levels and shares look poised to pop. Technically, we are at an interesting level and there are signs for investors to be optimistic. Looking back at the last three years there is a clear and concise line of demarcation – the $145/$146 area. Above it and good things have happened, below it – and not so much. As we head into Thursday morning’s results, we need to watch this $145/$146 level carefully. There’s still work to be done to get there, but we see signs in the momentum indicators that price can finally run to and break above this inflection point. The RSI has been showing a bullish divergence. When shares made a lower low, the momentum did not. Now the stock is breaking its recent downtrend and its RSI is attempting to break its midpoint at 50. Add in the MACD indicator and we see a bullish crossover. In prior instances that has led to nice rallies. Positive risk/reward measurements are in place that favor a bounce and run to $156. We may be in the early phases of a major turnaround as well. This should take longer to play out – give it another quarter, maybe two – but could bode well for the longer-term investor. An inverted head-and-shoulders formation is taking shape and that could see shares run to $175/$180 once confirmed by a breakout above $156. Moves like that tend to take time – especially in the low beta Consumer Staple sector – but the set-up is there and favors taking a long position into earnings. The play into earnings – set stop losses at $135. Historically the two worst moves over the last 10 years following results were this April and February – shares dropped -4.5% and -4.9% respectively. That would be my downside risk. To the upside – targets of $146 then $156 seem quite plausible. The real turnaround in price may take longer but we are seeing signs of a bottom giving investors a chance to add a classic staple to their portfolio. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
