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

Reuben Gregg Brewer, The Motley Fool

Fri, May 9, 2025, 3:24 AM 5 min read

Key Points

Berkshire Hathaway owns both Coca-Cola and Kraft Heinz.
Strongly executing Coca-Cola is currently looking a bit expensive as an investment.
Kraft Heinz appears attractively priced, but it comes with some notable problems.
10 stocks we like better than Coca-Cola ›

Investors monitor Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) portfolio of common stocks closely as they attempt to glean what CEO Warren Buffett and his team are thinking. That's fine for recent buys and sells within Berkshire Hathaway's portfolio, but it doesn't work quite as well for long-term holdings like Coca-Cola (NYSE: KO) and Kraft Heinz (NASDAQ: KHC). What should investors make of these two Buffett-owned consumer staples stocks today?

What do Coca-Cola and Kraft Heinz do?

From a big-picture perspective, Coca-Cola and Kraft Heinz both make food products within the broader consumer staples sector. Consumer staples are interesting because the products tend to be necessities and they tend to have fairly low costs. Brand loyalty is also an important factor in the highly competitive space. The important takeaway for investors, particularly during uncertain economic times like today, is that consumer staples tend to keep getting purchased regardless of what is going on with the economy. Thus, the sector is considered defensive. This is why investors might be interested in Coca-Cola and Kraft Heinz right now.

A person shopping in a grocery store. — Image source: Getty Images.

Coca-Cola operates exclusively in the beverage niche of the consumer staples sector. It is one of the largest soda companies on Earth with a name that is known the world over. It has an impressive distribution network, strong marketing skills, and a powerful research and development team. It also has the scale to act as an industry consolidator, buying up-and-coming brands to fill out its portfolio to keep pace with consumer trends.

Kraft Heinz has a broad and diverse portfolio of food products. It is not nearly as dominant in the food niche as Coca-Cola is in the beverage space. That said, Kraft Heinz does have some very strong brands. Like Coca-Cola, it is an important partner for retailers given its distribution and marketing strengths.

How have Coca-Cola and Kraft Heinz been doing lately?

Performance is where the most important difference lies between Coca-Cola and Kraft Heinz. Coca-Cola is doing well, with first-quarter 2025 organic revenue growth up a very healthy 6%. Investors have recognized Coca-Cola's success and the stock is up around 15% over the past year.

Kraft Heinz has not been performing particularly well of late. In fact, it hasn't been performing particularly well for a number of years. When Kraft merged with Heinz the goal was cost-cutting, but that didn't work out as well as hoped. The company then shifted to focusing on its core brands, which also hasn't worked out as well as hoped. Overall organic sales fell 4.7% in the first quarter of 2025, with organic sales of its "focus" brands down an even worse 8.1%. Investors have shunned the stock, which is down around 20% over the past year.

Pay up for quality or take a risk for value?

It seems likely that Kraft Heinz will, eventually, get back on the right track. But until that happens, which is more difficult to do during a period of economic uncertainty, investors are likely to avoid the shares. That has left the stock with price-to-sales and price-to-earnings ratios that are below their five-year averages. The dividend yield is a lofty 5.6%. For value investors and those looking to maximize income, that may make Kraft Heinz the better option.

But, at the same time, there is additional risk in buying Kraft Heinz given the ongoing turnaround effort that isn't going particularly well. In that regard, Coca-Cola and its still attractive 2.8% dividend yield might be more appropriate for risk-averse investors. The only problem is that Coca-Cola's P/S and P/E ratios are both above their five-year averages. So you are paying at least full fare, if not a little more, for quality here. That may be worth the price if you are looking to avoid risk.

Although every investor has to make their own final call, it seems like most investors will be better served playing it safe with Coca-Cola over Kraft Heinz. In a difficult market it seems logical to avoid a company that has faced years of problems brought about by a giant merger that didn't work out particularly well. In fact, it might interest investors to know that Buffett actually called buying Kraft Heinz a mistake a few years ago as he wrote down the value of the investment.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.

Best Stock to Buy Right Now: Coca-Cola vs. Kraft Heinz was originally published by The Motley Fool

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