(MONEY Magazine) – With some of the world's best-known brand names, swiftly growing sales and earnings, and video commercials by Michael Jackson and boxer Mike Tyson, PepsiCo has a lot going for it. What the company doesn't have, though, is the ability to attract investor interest. Recently, its shares were selling at a price/earnings ratio of only 13.5 times analysts' estimates of 1988 profits, compared with 14.1 for the typical large manufacturing company. That may not sound like much of a discount, but PepsiCo frequently has traded 20% to 30% above the multiple of other blue-chip industrial shares. Analyst William Leach of Donaldson Lufkin & Jenrette believes that investors have been undervaluing PepsiCo because of their recent concentration on takeover targets. ''PepsiCo is viewed as too big to buy and too successful to restructure,'' he explains. Investors may also have missed the fact that PepsiCo's restaurant division is starting to sizzle. With more outlets than any other fast-food company -- 16,500 vs. 10,000 for McDonald's -- the division includes Pizza Hut, Kentucky Fried Chicken and Taco Bell chains. The restaurants enjoyed a 21% sales increase in the first quarter of 1988, largely because of a new emphasis on the delivery business at Pizza Hut and an increase in lunch trade at Kentucky Fried Chicken coming principally from new menu items such as the nuggets known as Chicken Littles. These results -- along with cost-cutting efforts in all divisions -- have led analysts to predict a 22% increase in PepsiCo's earnings per share for 1988 and a further 16% advance in 1989. The company's return on shareholders' equity -- a common measure of profitability -- could reach 25% this year, nearly double the figure for the typical Fortune 500 company, says Prudential-Bache analyst George Thompson. Many analysts rate the stock a compelling buy for conservative, long-term investors. In addition to PepsiCo's restaurant division's strong prospects for growth, the company's other products -- chiefly its colas and Frito-Lay salted snacks -- suffer relatively little when the economy slows. Since a recession could easily occur within the next 18 months, strategists say, the stock is an excellent defensive choice. Thompson thinks that PepsiCo stock could rise 35% to $50 within the next 12 months. Longer term, he adds, ''the company's fundamental performance should outstrip that of most companies -- no matter what sector they're in.''

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: PEPSICO INC. DESCRIPTION: Financial data for Pepsico stock.