Pepsi (PEP): Getting Fat Will Avoid The Recession

"Comfort food" is close to recession-proof, at least according to Pepsi (PEP). According to Reuters, Pepsi believes that "its business, based on "comfort foods", to be resilient to a U.S. economic slowdown, Chief Executive Indra Nooyi said on Wednesday."

The argument is entirely sensible. Soft drinks and chips are sold for just a few dollars. In a downturn almost anyone can afford that. The "sugar high" is probably helpful to those without homes or cars. That makes Pepsi and rival Coke (KO) good holdings for investors worried about the economy.

There is a hidden cost. Obesity and diabetes, linked in part to poor diet, are also related to sugar, salt, Pepsi drinks, and the like, at least in high volumes of intake. And, rising costs in medical care probably don’t help the economy.

Douglas A. McIntyre