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

Lawrence Rothman, CFA, The Motley Fool

Sun, Apr 6, 2025, 9:35 AM 4 min read

Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP) have a long-standing rivalry as each has battled for the hearts, minds, and wallets of consumers. The heated competition has been intense over the last few decades as they engaged in the cola wars.

These venerable companies have become well-known household names, and they're giants in the consumer packaged goods industry. However, it's important to look beyond past achievements and growth to see which company offers better investment potential.

Stock analysis may not have the entertainment value of the companies' commercials, but which one, Coca-Cola or PepsiCo, deserves your investment dollars?

Coca-Cola started selling its namesake brand in 1886, and it remains a pure beverage company. It has expanded beyond soda, however, and also sells items like water, coffee, tea, juice, and plant-based beverages.

It's tough for companies to remain relevant and stay in business for well over a century. Fortunately, Coca-Cola has been able to continue growing revenue. Fourth-quarter revenue, adjusted to exclude the effects of acquisitions/divestitures and foreign currency translations, grew 14%.

Price/mix accounted for the majority of the increase, 9 percentage points. Importantly, though, the balance came from increased volume. Coca-Cola's Q4 operating income grew an impressive 22%. That strong increase is noteworthy since it came as consumers have been weary after high inflation and they've become reluctant to purchase nonessentials.

Coca-Cola's shares have rewarded investors, with the price gaining about 18% over the last year through April 4. The S&P 500 index lost 1.4% during this period.

Coca-Cola's stock does trade at a slightly higher valuation than the S&P 500 average. The former has a trailing price-to-earnings (P/E) ratio of 28 compared to the latter's 27.

PepsiCo, meanwhile, has expanded beyond soda. It also offers food items like tortilla chips, potato chips, cereal, and granola bars under brands like Cheetos, Doritos, Life, and Quaker.

While the company has been successful for a long time, revenue has been sluggish lately. Adjusted fourth-quarter revenue increased 2.1%, split between volume and price increases. Management was able to control expenses, and adjusted earnings per share increased 14%.

PepsiCo's 2024 revenue also was up 2% for the year. However, this was solely due to price increases, which added 4 percentage points while volume subtracted 2 percentage points. Management doesn't expect much acceleration this year, forecasting a low-single-digit percentage increase in revenue.