Forget Kraft Heinz: Buy This Unstoppable Consumer Staple Leader Instead

Few stocks have been as big of a disappointment as Kraft Heinz (NASDAQ: KHC) over the last decade.

The 2015 merger of the eponymous food giants was engineered by Warren Buffett's Berkshire Hathaway and Brazilian investment firm 3G Capital, but Buffett has called it a disappointment several times and said Berkshire overpaid for the deal.

The stock is down 65% over the last decade, and management is now turning to a breakup to create value, separating the company into North American Grocery Co, which will hold staples like Oscar Mayer and Kraft and Staples, and Global Taste Elevation Co, which contains Heinz, Philadelphia, and Kraft Mac & Cheese, among others.

Buffett also dismissed that move, saying it does nothing to fix the underlying business.

Investors who are understandably frustrated with Kraft Heinz might want to consider a different consumer staples stock like Costco (NASDAQ: COST), which is not only a major customer of Kraft Heinz but also a top performer on the stock market, up 440% over the last decade.

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Sell Kraft Heinz, Buy Costco

Kraft Heinz faces a problem that has dogged many packaged food companies in recent years. Consumer tastes are shifting away from unhealthy, processed foods.

A stock like Costco can offer protection from the economic cycle in the same way that food staples like Kraft Heinz traditionally do, because Costco makes most of its revenue from groceries. The company has a recession-proof business model because it counts on membership fees for most of its profit, selling its merchandise at near cost to entice customers.

Costco also has an unbeatable track record of growth among brick-and-mortar retailers as it continues to grow same-store sales, open new stores, and add members.

In its most recent quarter, Costco reported 6.4% comparable sales growth, which included 20.5% e-commerce growth, showing it's tapping into online sales even as it has mostly avoided delivery.

It's a good time to buy the stock as well because shares have pulled back from their earlier peak, down 21% from where they were at the start of the year, even as the business results remain solid.

Costco now trades at a price-to-earnings ratio of 45.6, which is a premium valuation, but it's earned that. The retailer won't match Kraft Heinz's dividend yield, but it has a history of rewarding investors with special dividends every few years and should continue to do so.

Overall, if you're looking for a combination of safety and growth, it's hard to beat Costco.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.