2 Undervalued, High-Quality Companies to Buy Now and Hold Forever

Good companies don't go on sale very often. When they do, you should pay close attention. Right now two of the world's largest consumer staples companies are both attractively priced, one more so than the other.

Moreover, they are both Dividend Kings, which is a testament to their staying power as businesses.

If you are looking for a high-quality company that's undervalued, one of these two buy-and-hold stocks should be on the top of your list right now (if not both).

1. Coca-Cola is attractively priced

Coca-Cola (NYSE: KO) is the most important non-alcoholic beverage maker on the planet. It has iconic brands, massive distribution reach, top-notch marketing teams, and strong research and development skills. With a roughly $300 billion market cap, it is also large enough to use acquisitions to quickly bring new brands and product lines into its lineup.

The proof of the company's success and resilience shows up in its dividend history. With more than six decades of annual dividend increases, it has one of the longest dividend streaks of any Dividend King consumer staples business. It is No. 2 on the list, sitting behind only Procter & Gamble.

And the stock is attractively priced today even as it outperforms its main competitor (more on that in a second). One of the reasons for this is that consumer tastes are shifting, as they always do. With a trend toward healthier foods, soda is a tougher sell for consumers right now. But that's the opportunity here.

Coca-Cola has adjusted to shifting consumer tastes many times before. Given its history, it is likely to do that this time around, too. But while Wall Street is worried, you can pick the stock up while it is undervalued. Specifically, the stock's price-to-earnings and price-to-book value ratios are both below their five-year averages.

To be fair, the 2.9% dividend yield is only about middle of the road for the stock and the price-to-sales ratio is roughly in line with its five-year average. So it is hardly a screaming buy. However, a great business like this doesn't go on sale very often so a fair-to-slightly-cheap price will probably be a good entry point for more conservative dividend investors.

2. PepsiCo looks pretty cheap

For those willing to take on a little more risk, however, Coca-Cola competitor PepsiCo (NASDAQ: PEP) could be an even better choice. PepsiCo is also one of the largest consumer staples companies, but it has a more diversified business. It is a key player in beverages (Pepsi), the most important salty snack maker (Frito-Lay), and has a sizable packaged foods business (Quaker Oats). It can stand toe to toe with any consumer staples company as a business.

That said, it isn't hitting on all cylinders right now. For example, organic sales grew 1.3% in the third quarter of 2025 compared to 6% for Coca-Cola. But even good companies sometimes go through really rough patches, which can offer up big opportunities for more aggressive long-term investors. Just remember that, as a Dividend King, PepsiCo has muddled through hard times before.

It will help to put some numbers on the opportunity here. For starters, PepsiCo's 3.8% dividend yield is toward the high end of the stock's historical yield range. That hints at the stock being undervalued by investors, a fact that is backed up by the price-to-sales and price-to-book value ratios both being below their five-year averages. The P/E ratio is over the longer term average, but that's a function of its current headwinds. Earnings can be highly volatile from year to year.

Valuation is more art than science, so you are really looking for directional confirmation rather than everything agreeing perfectly.

There's more risk with an investment in PepsiCo, but it is also the cheaper of these two consumer staples giants. If you can think long term, and have a strong stomach, it could be a great high-yield addition to an income focused portfolio.

Don't wait too long with Coca-Cola or PepsiCo

High-quality companies don't remain undervalued forever. While emotions tend to make Wall Street a voting machine in the short term, it tends to be a highly accurate weighting machine over the long term. So when stocks like Coca-Cola and PepsiCo go on sale, it usually pays to dig in quickly and act quickly.

Reuben Gregg Brewer has positions in PepsiCo and Procter & Gamble. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.