Colgate-Palmolive vs. Hershey: Which Consumer Goods Stock Is the Better Buy for 2027?

Defensive investors often look for stable dividends and household names during times of market uncertainty. Choosing between Colgate-Palmolive (NYSE:CL) and Hershey (NYSE:HSY) requires understanding their different approaches to global growth and category dominance.

Colgate-Palmolive offers broad international exposure through its leadership in oral care and pet nutrition. Hershey provides a concentrated bet on the resilient American snacking market with its portfolio of iconic chocolate brands. Comparing these two giants helps reveal which better aligns with your strategy for 2027.

The case for Colgate-Palmolive

Colgate-Palmolive is a global leader in oral care and hygiene, operating as one of the most recognizable names among consumer staples stocks. The company sells essential products like toothpaste and soaps in over 200 countries and relies on its Hill's Pet Nutrition segment for significant growth.

On a trailing 12-month basis through the September quarter, revenue reached $21 billion, representing roughly 6% year-over-year growth. Net income was $2 billion. This level of profitability reflects the steady global demand for the company's diverse portfolio of household and personal care brands.

As of its September 2026 balance sheet, the company carried a debt-to-equity ratio of 12x, which measures total debt relative to shareholder equity. Its current ratio was about 1x, measuring the company's ability to pay short-term obligations with its current assets.

TTM free cash flow was nearly $3.8 billion, representing cash generated after accounting for all capital expenditures.

The case for Hershey

Hershey is a snacking powerhouse with a portfolio of more than 70 brands, including iconic sweets, mints, and chocolate products. The company primarily focuses on its North American confection and snacking segments while gradually expanding its international presence in regions like Brazil. McLane Company represents roughly 27% of consolidated net sales as a primary distributor for retail chains, and such customer concentration adds a layer of risk to the business.

TTM revenue for the September quarter was $12.2 billion, an increase of 6.7% over the year-ago period. Net income was nearly $1.8 billion. This performance highlights the company's ability to maintain sales growth and consumer loyalty in the highly competitive snack market.

The debt-to-equity ratio was approximately 1.1x, calculated by dividing total debt by the value of shareholder equity. The current ratio was roughly 1.2x, indicating the company's ability to meet short-term liabilities with its short-term assets. TTM free cash flow was close to $2.1 billion.

Risk profile comparison

Colgate-Palmolive faces risks from international macroeconomic and geopolitical instability, particularly regarding its operations in Ukraine and volatile markets like Venezuela. The company also deals with intense global competition from private labels and must navigate substantial litigation risks related to talc claims. Furthermore, its reliance on a limited number of single-source suppliers for key raw materials could impact production.

Hershey faces volatility in global commodity markets, especially cocoa, which has weighed on its results over the last few years. The company is currently working through international growth challenges and the integration of acquisitions like LesserEvil. Additionally, it must manage technology risks associated with its global ERP system and potential cyber threats.

Valuation comparison

Hershey currently offers a more attractive valuation based on its lower Forward P/E and its lower P/S ratio, which compares the price to sales over the past twelve months.

Valuation metrics include those sourced from Financial Modeling Prep (FMP) and may differ from those of other data providers.

Which stock would I buy for 2027?

I would buy Hershey because it offers more value than Colgate shares. Hershey has faced record-high cocoa prices in recent years, which has sent its stock down and dividend yield up. It offers a higher yield at 3.4% compared to Colgate's 2.2% as of Nov. 4, 2026.

That higher yield is also well supported by free cash flow, with Hershey distributing about 55% of its free cash flow over the past year. By comparison, Colgate paid out 44% of its trailing free cash flow. Both are healthy payout ratios that provide ample cushion to sustain and grow the dividend even if profits weaken due to a recession.

Colgate is the leader in toothpaste and owns other household brands, including Hill's pet food. This drives stable sales in almost any economy, but I don't believe people are going to lose their taste for chocolate either. Hershey's revenues have grown for many years, reflecting a strategy to expand its portfolio of candy and snacks, including Skinny Pop. These brands put it in a solid position for long-term growth.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Colgate-Palmolive and Hershey. The Motley Fool has a disclosure policy.