Best Stock to Buy Now: Coca-Cola vs. PepsiCo

coca cola (NYSE: KO) and PepsiCo (NASDAQ: PEP) Each has long-standing rivalries as they fight for the heart, heart and wallet of consumers. The fierce competition has been fierce over the past decades as they were engaged in the Coke War.

These venerable companies become famous common names, and they Consumer packaged products industry. However, it is important to go beyond past achievements and growth to see which companies offer better investment potential.

Stock analysis may not have the entertainment value of a company’s commercial, but which is Coca-Cola or PepsiCo worth your investment dollars?

The two of them smiled while they were drinking soda. — Image source: Getty Images.

Coca-Cola began selling the brand of the same name in 1886 and remains a pure beverage company. However, it has expanded beyond soda and sells items such as water, coffee, tea, juices and plant-based drinks.

It is difficult for businesses to remain relevant and maintain their business for more than a century. Luckily, Coca-Cola has been able to continue to increase its revenue. 4th quarter revenue, Adjusted to exclude The impact of acquisitions/sales and foreign currency translations increased by 14%.

Price/mix accounts for the majority of the 9% points increase. But importantly, balance comes from an increase in volume. Coca-Cola’s fourth quarter operating profit increased by an impressive 22%. Its strong increase is noteworthy as consumers become tired after high inflation and become reluctant to make non-essential purchases.

Coca-Cola’s stocks are rewarding investors, with prices up about 18% last year until April 4th. S&P 500 The index lost 1.4% during this period.

Coca-Cola stocks trade at a slightly higher valuation than the S&P 500 average. The former has a 28 price (P/E) ratio compared to the latter 27.

Meanwhile, PepsiCo is expanding beyond soda. It also offers groceries such as tortilla chips, potato chips, cereals and granola bars under brands such as Cheatos, Doritos, Life, and Quakers.

The company has been successful for a long time, but its revenue has slowed recently. Adjusted fourth quarter revenues increased 2.1%, split into volume and price increases. Management was able to manage expenses, with adjusted earnings per share increased by 14%.

PepsiCo’s revenues for 2024 also increased by 2% per year. However, this was only due to price increases, adding 4% points, but volume subtracting 2% points. Management is not expecting much acceleration this year, forecasting a low-digit percentage increase in revenue.

Stocks halted last year, reflecting slow topline growth. During this period, PepsiCo’s stock price fell approximately 14%. Additionally, the P/E ratio contracted from 26 to 21, making the rating cheaper.

The companies will undoubtedly feel the impact of the Trump administration’s tariff implementation, accompanied by a global presence. No one knows the full impact, investors should support short-term impacts.

However, it is important for investors to maintain a long-term perspective and focus on the underlying business. Dividends remain an important part of Coca-Cola and PepsiCo’s total revenues, and given the uncertain short-term global economic outlook, it could become even more important.

They each raised their dividends for over 50 years and gained position among the dividend kings. Dividend yields for Coca-Cola and Pepsico are 2.9% and 3.7%, respectively.

It offers a better outlook, both for reliable dividend payers. Given Coca-Cola’s current momentum and ability to navigate narrowed consumers, we choose its inventory over Pepsico despite its more expensive valuation.

Consider this before purchasing stock at Coca-Cola.

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Lawrence Rothman, CFA There is no position in any of the stocks mentioned. Motley’s fools have no position in any of the stocks mentioned. To Motley’s fool Disclosure Policy.

Best Stock to Buy Now: Coca-Cola vs. PepsiCo Originally published by The Motley Fool

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