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The Coca-Cola Company (KO): This Beverage Giant Is Still the One for You!

The obvious alternative

PepsiCo, Inc. (NYSE:PEP) is very similarly valued to Coca-Cola, so much so that as investments, the two are almost interchangeable. PepsiCo trades at a slightly higher P/E of 20.7 times TTM earnings and pays a 2.8% dividend yield. Some investors prefer PepsiCo because of its more diversified lineup of products, which include a large lineup of snack foods in addition to the beverage lines. In fact, food sales in the U.S. account for 37% of PepsiCo’s total revenue. The consensus estimates call for PepsiCo to grow at the same 8% rate as The Coca-Cola Company (NYSE:KO), so it’s really a matter of personal preference. I prefer Coca-Cola because of its dominant brand name that is a leader all over the world.

Another way to go

For those who might prefer to invest in an even more food-oriented company, take a look at Kraft Foods Group Inc (NASDAQ:KRFT). Kraft is a leading manufacturer of cheeses, dressings, meats (Oscar Mayer), coffee (Maxwell House), and much more. Kraft is a much better dividend payer at 3.58% and trades at a similar P/E of 20.8 times TTM. However, the company is expected to grow at a slightly slower 7% rate going forward. Over the long run though, I think that Kraft has the most international growth potential, with just 14% of its revenue coming from international markets, mostly in Canada.


None of these three companies would make a bad choice for your portfolio. I happen to like The Coca-Cola Company (NYSE:KO) slightly better than the other two for its strong brand name, ambitious growth of its product lines, and its excellent record of delivering value for shareholders.

The article This Beverage Giant Is Still the One for You! originally appeared on and is written by Matthew Frankel.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo. Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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