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PepsiCo vs. Nestle: Which Consumer Goods Stock is a Better Buy?

Stock MarketsOct 07, 2021 01:30PM ET
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© Reuters. PepsiCo vs. Nestle: Which Consumer Goods Stock is a Better Buy?

As consumer spending increased significantly in the first half of the year, driven by economic recovery and declining unemployment, the consumer goods industry witnessed decent growth. Consumer goods stocks PepsiCo (NASDAQ:PEP) and Nestlé (NSRGY (OTC:NSRGY)) should benefit from continuing spending trends. But which of these stocks is a better choice now? Read more to find out.Operating in over 200 countries, PepsiCo, Inc. (PEP) is a food and beverage company. The U.S.-based company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East, South Asia; and Asia Pacific, Australia and New Zealand and China Region. On the other hand, Switzerland-based Nestlé S.A. (NSRGY) is one of the world’s top food and drink processing conglomerates. The company offers a broad array of food and beverages, including chocolates, bottled water, coffee, milk, confectionery, and pet foods.

Consumer spending increased significantly in the first half of 2021, powered by continued economic recovery and an improved job market. Consumer spending, also known as personal consumption expenditures (PCE), increased 12% in the second quarter of 2021, following an 11.4% increase in the first quarter. As the spending trends continue, the consumer goods industry should keep benefiting. Moreover, given the relatively inelastic demand for these products, the industry should remain unaffected from any potential economic changes in the near term. Given this backdrop, both PEP and NSRGY should keep benefiting.

PEP has gained 7.9% over the past six months, while NSRGY has returned 5.9%. In terms of the past year’s performance, PEP is the winner with 14.2% gains versus NSRGY’s 2.9%. Furthermore, PEP’s 4.5% gains year-to-date compares with NSRGY’s 2.8% returns.

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PepsiCo vs. Nestle: Which Consumer Goods Stock is a Better Buy?
 

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