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2 Consumer Goods Stocks That Could Make You a Lot Richer Than Coca-Cola Will

Motley Fool - Sat Nov 25, 2023

No one would argue against Coca-Cola's (NYSE: KO) position as a top consumer goods stock. The company, as the world's biggest non-alcoholic beverage maker, is a market leader and sells its products in more than 200 countries. It's delivered years of earnings growth and more than 50 years of dividend increases. So Coca-Cola surely has made many investors rich over time.

But to get rich or add significantly to your wealth starting right now, Coca-Cola may not be the best bet. Other companies might offer you growth potential that beats the beverage maker's 5% to 8% revenue growth over the past few quarters. And this growth could lead to share price performance that may make you a lot richer than Coca-Cola will. Let's take a look at two consumer goods stocks that could equal more riches down the road than the beverage giant.

Smiling person counting handful of cash bills.

Image source: Getty Images.

1. Apple

When you buy a Coca-Cola beverage, you drink it, and your purchase ends there. But with Apple (NASDAQ: AAPL), your spending likely continues well beyond that iPhone or Mac purchase. That's why Apple's services business is booming -- and why this tech and consumer goods giant could help you along the path to wealth.

By services, I mean anything from digital content to iCloud storage or even financial services such as making payments. All these and other services -- used by Apple product customers -- generate recurrent revenue for Apple. So, even if product revenues don't climb every single quarter (after all, you don't buy a new iPhone every day), it's likely services revenue will remain strong.

In the most recent quarter, Apple's services revenue soared 16% to reach an all-time high. Importantly, services are more profitable for Apple than products are -- gross margin for services was about 70% in the quarter, compared with 36% for products.

All this means services clearly could be a solid recurrent revenue driver for the company. On top of this, Apple's strong moat, or competitive advantage, suggests product revenue should continue to grow over time too -- even if certain quarters see a dip, often due to temporary factors like negative currency exchanges or the timing of a new product launch.

So, if Apple's share price performance follows future revenue growth, your investment could soar.

2. Chewy

Chewy(NYSE: CHWY) is the best friend of pet parents because the e-commerce company sells everything pets need, from food to health insurance. But this company should be the best friend of investors too, due to its earnings progress so far and long-term prospects.

The e-commerce player reached a big milestone -- profitability -- last year, and it continued to grow revenue and remain profitable this year in spite of a difficult economy. In the most recent quarter, Chewy's net sales even climbed more than 14%. And the company's active customer base is spending more and more on the website -- their spend also advanced more than 14% in the quarter. So there's reason to be optimistic about Chewy's future revenue.

Chewy also has a significant catalyst ahead. The company recently expanded into Canada -- thanks to its existing infrastructure, it did this without significant investment -- and this market could be big. Chewy says it could be much like the U.S. when it comes to profitability, which gives us another reason to be optimistic about revenue growth.

Meanwhile, Chewy's shares have declined since the start of the year, so they clearly don't yet reflect all these positive points. That means right now represents an opportunity for long-term investors to get in early on this growth story -- and potentially win big over time.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Chewy. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.

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