Why Coca-Cola's Rally Makes PepsiCo Stock Look Even More Attractive

Group 1: Company Overview - Coca-Cola focuses exclusively on beverages, leveraging a vast global distribution network and strong marketing skills, making it a leader in the consumer staples sector [2] - PepsiCo, while also a major beverage player, diversifies its offerings with snacks and packaged food products, maintaining a strong distribution network and marketing capabilities [3] - PepsiCo ranks as the No. 1 snack brand and holds a solid No. 2 position in the broader beverage market, showcasing its diversified business model [4] Group 2: Dividend Strength - Both Coca-Cola and PepsiCo are recognized as Dividend Kings, indicating robust underlying business models, with Coca-Cola having a longer dividend streak [5] Group 3: Current Performance - Currently, Coca-Cola is outperforming PepsiCo, which is experiencing some business weakness, particularly after a period of significant price increases due to inflation [6][7] - PepsiCo reported organic sales growth of 2% and core earnings growth of 9% in 2024, with expectations for similar performance in 2025 [7] Group 4: Stock Valuation - PepsiCo's stock has declined approximately 20% from its peak in 2023, resulting in a historically high yield and price-to-sales and price-to-earnings ratios below five-year averages, suggesting it is undervalued [8] - In contrast, Coca-Cola's stock has rallied, leading to a lower dividend yield and price ratios above their five-year averages, making it appear more expensive [9] Group 5: Investment Recommendation - For long-term investors, particularly those focused on income, PepsiCo presents a more compelling investment opportunity due to its attractive yield of 3.5% following Coca-Cola's recent price rally [10]