PEP or UNH?

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At current valuations, do you see UNH or PEP as the more attractive long-term investment?

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Asked on October 22, 2024 11:26 am
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Hey there. At this point in time, I do see both stocks as borderline equally attractive.

They're both facing a bit of headwinds right now. Pepsi being a decline in overall snack type purchases due to the economic downturn and United seeing higher medical costs that is impacting profitability over the short term.

I believe Pepsi's headwinds will be short-term in nature, as rates come down and discretionary purchases increase, it will see activity return in terms of food/snack sales.

For United, it will just take some time for underwriters to price in higher costs on new policies. It will be a cost that is ultimately absorbed eventually.

If I were to strictly speak on a valuation perspective, I believe United is the cheaper company at this point in time and will grow at a faster pace over the long-term. However, I do believe it will take them longer to absorb headwinds, and for that reason I do think Pepsi could outperform in over the short term.

If I am looking to take advantage of a long-term buy and hold option, I do like United. However, if I'm looking for a short-term option that could see a return to better valuations on discretionary spending increases, Pepsi.

Hope this helps.

Dan

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Posted by Dan Kent
Answered on October 23, 2024 4:37 pm
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Thanks Dan!
(Brent Mooder at October 23, 2024 7:08 pm)