Cola (WKN: 850663) and General Mills (WKN: 853862) both promise solid protection against inflation. If we look at their stock prices, we can say: they are rising in a volatile, uncertain time. It is not only the defensive mix, but above all the pricing power to counter inflation.
But which of these two stocks is the best choice when it comes to protecting against inflation? To that end, let’s take a closer look at Coca-Cola and General Mills today.
Coca-Cola vs. General Mills: The brand!
First of all, let’s look at the brand or brands. In principle, the American group General Mills can come up with some strong brands here. Especially in the area of American breakfast products, the food business is a heavyweight at about the same level as Kellogg’s. But Häagen-Daz’s ice cream, Knack & Back and a total of 100 brands mean a solid breadth. But to be fair, almost no food company can keep up with Coca-Cola.
The American beverage company is simply a fire brigade. The showers of the same name in all their variants, Sprite and Fanta should not be missing anywhere. In no retail, in any restaurant, in any fast food, in any kiosk, not even for a party. To put it in perspective, Coca-Cola is sixth on the list of the most valuable brands on the planet, and General Mills does not even show up as far as I can see. Therefore, this point must inevitably go to the beverage company. But the food business also has its strengths, especially in the U.S. business.
Valuation and dividend!
But the defensive quality and pricing have a price. At Coca-Cola, it is currently relatively high. According to the US platform NASDAQ, we see a dividend of just 2.75% here. In addition, the price / earnings ratio is 27.1. This tells us that the stock really is not cheap anymore.
General Mills, on the other hand, is rated at a price-to-earnings ratio of 19.3 according to the same platform and still has a yield of 2.83%. It is cheaper in many ways, especially since the payout ratio seems to be lower at just over 50%.
Nevertheless, there is a qualitative component of Coca-Cola: like a true dividend king. General Mills, on the other hand, has at least kept yields constant at the level of the previous year for about three and a half decades with no increases each year. But if we look at the valuation alone, it is very clear: the American food company would be the favorite.
Coca-Cola vs. General Mills: Growth!
Of course, it is not only the valuation that is crucial, but also the growth. And here again, Coca-Cola can convince. Management posted revenue growth of 16% in the first quarter to earnings growth of 23% to $ 0.64. This shows the solid pricing power and quality.
General Mills, on the other hand, had sales growth of 4% in the most recent quarter, when the comparative figure was a bit lame. Another financial year means that the effect of pricing power may not yet have had its full effect.
Nevertheless: Due to the stronger brand quality and pricing power relative to the bottlers, I think Coca-Cola can be a little more compelling in terms of growth. The last point therefore goes to the American beverage company.
Another conclusion for me, however, is that these two stocks have something to counter inflation. In any case, the rising stock prices in this volatile time are a good indicator of quality pointing in this direction.
The article Coca-Cola vs General Mills: This top stock is now the more attractive inflation hedge! first appeared on The Motley Fool Germany.
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Vincent owns shares in Coca-Cola, General Mills and Kellogg’s. The Motley Fool does not own any of the listed shares.
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