Dr Pepper Snapple (DPS) Could Add Some Fizz to Your Portfolio - Barron's

Dr Pepper, the soda, is a beautiful kinship of various flavors ranging from vanilla, to prune, and almond. Dr Pepper Snapple (NYSE: DPS), the group, is a company that would add a little fizz to your portfolio, according to a recent Barron's article.

One analyst from CLSA, an affiliate of Calyon Securities, states that DPS holds the number one or number two spots in a wide range of drink categories thanks to their broad portfolio of offerings. The company produces and sells 7UP, Sunkist, Crush, Mott's Apple Juice, A&W Root Beer, Canada Dry, Schweppes, Hawaiian Punch, Rose's Lime Juice, Yoo-hoo, Clamato and Nantucket Nectars.

The main offering, Dr Pepper, has a strong presence in the Southern U.S., and a weaker presence in the Northeast. A mere 10% increase in sales outside the South would translate into a 5% gain in total sales for the company, and Cherry Dr Pepper is catching on well in California.

Another market that would boost DPS is the fast-growing Hispanic market, the largest consumers of non-cola beverages. In this market, DPS holds six of the top ten spots.

On that note, it should be pointed out that 7Up and Snapple brands have given up a little bit of market share over the past two years. CEO Larry Young states that, although the Snapple brand is a small part of their business, its an important one and they are looking for innovative ways to build the name up and increase sales.

The company is currently trading at $35.16 per share, and boasts a forward P/E of 14.8x, below that industry average of 15.6x.

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