Investment Opportunities

Coke vs. Pepsi: Which Stock Comes Out on Top?


The presidential race is heating up.

Right now, you can’t turn on a computer or TV without coming across some mention of the election. And out in the real world, everyone’s wondering…

Who will you vote for – a Democrat or a Republican?

Frankly, we’re tired of that conversation. Instead, we’re focusing on another heated debate…

Coke or Pepsi?

It may seem like a silly question. But some folks are extremely passionate about the topic. Just try offering Pepsi to a diehard Coke drinker.

The war has raged for years.

This week’s chart looks at not which company makes the better drink, but which stock – The Coca-Cola Company (NYSE: KO) or PepsiCo (NYSE: PEP) – is stronger. We’ll also examine how both have performed in comparison to the S&P.

As you can see, it’s certainly paid to hold Coca-Cola and PepsiCo in recent years. This despite the fact that U.S. consumption of carbonated soft drinks has steadily declined.

How is this possible? It’s simple. A good portion of revenue for each company is generated outside the United States.

In 2015, Coca-Cola generated $44 billion in revenue – 52% of which came from international sales. Meanwhile, PepsiCo brought in $63 billion, 44% of which came from other countries.

So even as consumption numbers drop in the U.S., the rest of the world is picking up the slack.

Even better, when the economy is bad, soda is one product consumers will continue to buy. That’s why – as my colleague Anthony Summers pointed out a few weeks back – consumer staples are the perfect stocks to own in choppy markets.

Coca-Cola and PepsiCo are clearly no exception. Over the last decade, both companies have handily outperformed the broad markets. All while competing against each other…

But Coca-Cola is the clear winner with a 185% return vs. PepsiCo’s 122% gain. (At the same time, the S&P has advanced 94%.)

It’s also worth noting that both companies are esteemed members of the Dividend Aristocrats. Coca-Cola has increased its dividend every year for 54 years. And PepsiCo has done the same for 44 years running.

So while you may not be stocking your refrigerator with their products, you should definitely consider adding their shares to your portfolio.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Wall Street analysts.

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