Pretty Obvious Short Opportunity IMO.... Pepsi.

[vanzandt]

Lots of divisions in Pepsi. From the latest 8K:

That "FLNA"... that's Frito-Lay North America. Its about 25% of their revenue... but as you can see... about 50% of their profit. Lot of money in snacks.

And look at their one year performance:

Pretty nice eh? That's a thing of beauty.

I see a problem though.
All those snacks... or at least the lions share... all have one thing in common...

(take a peak below):

Thats no minor spike. To say the least.

Their earnings are in early July. No way they can get around addressing this. Companies like this.... the huge multi-nats... their earnings forecasts are as precision as a friggin Swiss watch. I mean its a science, and they have it down as such. Every friggin penny of expense going forward is accounted for. Every drop of juice squeezed to make that ever-coveted, upward forward guidance statement that Wall Street so loves to hear...

Its not their fault... but the price of corn.... oops.

Corn is gonna sting a lot of consumer package companies here in the near future... and a bunch will come down... but as these things go... PEP maybe more than most.

We'll see.

$134

 

[fan27]

Maybe they are hedged?

 

[maxinger]

Quite straight forward to trade.
Simply use a ruler to decide entry / exit point

 

[vanzandt]

Maybe they are hedged?

I thought about that... I'm sure they are. But at some point, its going to work its way in. It'll scare the Street. Pretty sure.

 

[destriero]

No way to know how much of their raws are hedged. I like the short, tho.

 

[dozu888]

nah... how much is a bag of flaming cheetos? f'ing $3.99.... how much raw corn is used to make that shit... 5 cents?

raw grain is a very tiny part of the final price.

 

[vanzandt]

nah... how much is a bag of flaming cheetos? f'ing $3.99.... how much raw corn is used to make that shit... 5 cents?

raw grain is a very tiny part of the final price.

That's an an excellent point really. Comparable generic products are a third the cost. The impact of this sudden sharp increase in the price of corn may indeed be minimal. There's not enough transparency in their filings to draw a truly informed conclusion.

Plus that chart... certainly not one that bodes well for any short considerations.

Probably a good idea to sit tight on this one for now.

 

[dozu888]

That's an an excellent point really. Comparable generic products are a third the cost. The impact of this sudden sharp increase in the price of corn may indeed be minimal. There's not enough transparency in their filings to draw a truly informed conclusion.

Plus that chart... certainly not one that bodes well for any short considerations.

Probably a good idea to sit tight on this one for now.

https://finviz.com/futures_charts.ashx?t=ZC&p=m1

you guys remember the good old days when a bag of corn chips were $1.79? then in 2011 and 2012 corn spiked to $800 then these guys just pass the cost to the consumers and raised them to $3.99 a bag... the thing is after corn got back down to $300 these blood suckers keep the chips at f'ing $3.99 a bag lol..

if OP look at this chart, $350 - $450 is barely some 'noise' on the monthly lol.

and the other thing is -

we are paying $3.99 for a bag of chips, while all that corn is wasted to produce alcohol, meanwhile we are the biggest oil/gas producer now... natural gas is almost free already lol.... but, have to keep them Iowa farmers alive.

I love Trump and everything he does, except this little thing he just did to allow E15 gas year round... I guess a small compensation to the farmers feeling a small pinch from the trade war.

 

[nooby_mcnoob]

The answer is to not eat any processed food.