Jim Cramer Shares Why PepsiCo (PEP) Caught His Eye During Consumer Headwinds

Jim Cramer highlighted PepsiCo (PEP) as a defensive stock during an August 26 episode of Mad Money, pointing to its high dividend yield and relief from cheaper oil prices. During the earnings call, management emphasized how high gasoline prices were affecting convenience store sales. Cramer noted that PepsiCo's stock had a 4% dividend yield and a low valuation compared to its historic multiples.

Despite these positive factors, the company faces headwinds from margin compression, especially in the PepsiCo Beverages North America segment, due to rising input costs, competitive pressures, and execution risks. The stock currently trades at a forward earnings multiple of 16.64. PepsiCo posted net revenue of $24.18 billion in its second-quarter earnings report, beating estimates by around $230 million, while non-GAAP earnings per share reached $2.20.

Global volume recovery and affirmed full-year guidance of 2% to 4% organic revenue growth highlight steady operational strength.