We're not quite in an official bull market, but the S&P 500 did gain more than 20% at one point this summer from its bottom last October, causing some observers to declare the bull has begun. Others contend a new all-time high is also needed to signal the running of the bulls, which could take longer with the recent market pullback, but it will happen eventually.

When it does, two of the stocks likely to be leading the way are Costco Wholesale (COST -0.19%) and Coca-Cola (KO -1.00%), classic blue chips that have a track record of outperforming in both bear markets and bull markets

In order to compare the two consumer staples stocks, we asked two of our Motley Fool contributors to present the buy case for each one. Here's what they had to say. 

A silhouette of a bull on a hill

Image source: Getty Images.

A market-beating model with a long growth runway

Jennifer Saibil (Costco Wholesale): Costco has been a market-beating stock for decades, outperforming the S&P 500 by wide margins over time. Looking to the future, its model is intact, and there's every reason to think the company can keep it up.

Costco's competitive advantage lies in its membership model. Members' fees go straight to the bottom line, and the company marks up its merchandise with razor-thin margins that generate volume and consumer loyalty. Even when sales growth began to slip earlier this year, renewal rates were at record highs, and they remained solid in the fiscal fourth quarter (ended Sept. 3) at a record 92.7% in North America and 90.4% globally. Membership continues to grow at robust rates, with household members up 7.9% from last year. Revenue from membership fees increased 13.7% year over year.

Now sales are returning to accelerated growth. In the fourth quarter, revenue increased 9.4% over last year, although comparable-store sales were weak, increasing only 1.1%. Still, that's better than the decline it posted in June. Things are moving back in the right direction. Earnings per share (EPS) were up from $4.20 last year to $4.86 this year, a welcome rise after a fall in the third quarter due to a one-time charge. 

Lest you think Costco is already large with a saturated market, it actually has plenty of room to open new stores. It operates 861 total global locations, with 591 in the U.S., in contrast with competitors like Walmart, which operates more than 4,600 U.S. locations, and Target, which operates nearly 2,000.

Costco doesn't have stores in all U.S. states yet, and it's just getting started with international expansion. It opened its first store in China earlier this year and ended the fiscal year with five in that country, with plans for two more in the calendar year 2024.

Lastly, Costco pays a dividend. It only yields 0.69% at the current price, but the company has been paying a special dividend on average every two and a half years of $5 to $10 per share each time. It's about that time now, which means it could be happening again soon.

As classic as it gets

Jeremy Bowman (Coca-Cola): Coca-Cola has just about everything you could want if you're looking for a safe, reliable blue chip stock

In fact, it's not a surprise that this has been one of Warren Buffett's favorite stocks for a long time. Coca-Cola has one of the most valuable brands in the world and owns other well-known beverages like Sprite and Fanta. It also has a virtually unmatched global distribution network and the marketing muscle to ensure that it maintains strong consumer demand and millions of points of sale for its products.

Because of that network, Coca-Cola is able to make acquisitions and leverage them by expanding its distribution, and while the company is most closely associated with sugary beverages, it has evolved with time, acquiring Costa Coffee, a popular U.K. coffee chain; sports drink BodyArmor, and protein-fortified dairy brand Fairlife, among others.

Despite the broader macro headwinds, Coca-Cola continues to deliver strong growth with organic revenue up 11% year over year in the second quarter and a 17% year-over-year increase in currency-neutral adjusted EPS. Management also said it gained market share in the soft drink category.

The stock is also a longtime dividend payer, currently offering a yield of 3.3%, and the company trades at a modest price-to-earnings ratio of 2, which is about even with the S&P 500, and significantly cheaper than Costco. That looks like a great price to pay for a stock that's seeing solid growth and has ample competitive advantages. Coca-Cola should continue to be a winner for investors looking for stable, dividend-paying stocks.