From Nasdaq: 2025-05-09 05:24:00

Investors closely watch Berkshire Hathaway’s portfolio, including Coca-Cola (NYSE: KO) and Kraft Heinz (NASDAQ: KHC), as consumer staples. Consumer staples are necessities with brand loyalty, making them defensive investments even during economic uncertainty. Coca-Cola has seen 6% organic revenue growth in Q1 2025, with a 15% stock increase. In contrast, Kraft Heinz’s organic sales fell 4.7% in Q1 2025, with a stock decline of around 20% in the past year. While Kraft Heinz may offer value with a 5.6% dividend yield, Coca-Cola’s stability and 2.8% yield may be more suitable for risk-averse investors. Buffett has called buying Kraft Heinz a mistake after a failed merger.

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.

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.

Investors are presented with a choice between buying Coca-Cola or Kraft Heinz stocks. Coca-Cola has shown strong performance with a 6% organic revenue growth in Q1 2025, while Kraft Heinz has struggled with a 4.7% decline in organic sales during the same period. Coca-Cola’s stock has increased around 15% in the past year, while Kraft Heinz has seen a decline of approximately 20%. Consider the stability and dividend yield of Coca-Cola for risk-averse investors, or the potential value and high dividend yield of Kraft Heinz for those willing to take on more risk. Buffett has admitted to the mistake of buying Kraft Heinz after a failed merger, suggesting caution for investors considering this option.



Read more at Nasdaq: Best Stock to Buy Right Now: Coca-Cola vs. Kraft Heinz