BUY OR SELL-Betting on P&G or Colgate for a consumer return?

(To read other Reuters 'Buy or Sell' stories, double-click on [BUYSELL/])

* P&G shares nearly flat this year

* Smaller rival Colgate up 17.4 percent in 2009

* Analysts still split on which is the best buy right now

By Jessica Wohl

CHICAGO, Nov 13 (Reuters) - For years now, investing in Procter & Gamble Co (PG.N) and smaller peers such as Colgate-Palmolive Co (CL.N) was seen as safe a bet as buying their toothpaste or dish soap.

But P&G's broad consumer products lineup, with pricey perfumes and electric shavers and toothbrushes, came under more pressure than Colgate in the economic downturn.

P&G shares have fallen 17.2 percent since December 2007, while Colgate's shares are trading near where they were nearly two years ago, before the financial crisis rocked the globe.

P&G recently topped Wall Street's expectations during its new chief executive's first quarter, sending shares higher. Meanwhile, consistent performer Colgate saw its shares rise marginally after also beating forecasts on the same day in late October.

P&G shares have jumped 7.1 percent since those reports, while Colgate has only climbed 3.6 percent. Colgate has a slightly higher price-to-earnings ratio than P&G.

Is now the time to jump back in and buy P&G? Or should investors stick with the proven player and buy Colgate?

GAMBLE ON CHANGE

"Procter was not the stock to own in late 2007, I think it is the stock to own now in late 2009," said Jefferies & Co analyst Doug Lane. He has a "strong buy" rating on P&G and some smaller household products companies, such as Clorox Co (CLX.N). He rates Colgate a "hold."

"They are clearly in investment mode and are ratcheting up spending in a major way," Lane said of P&G. "I think where we're going is the worst of the recession is behind us, Procter & Gamble is going on offensive, clearly."

"This company has historically been underrepresented in emerging markets and I think that that's going to change. I think the catalyst for that change was the Gillette acquisition with its emerging markets infrastructure and global brands, not just razor blades. We're keeping a sharp eye on Oral-B," the Gillette oral care brand which P&G is investing in, he said.

"That's why we're leaning towards Procter & Gamble. Colgate is a very well run company, and it's executing extremely well. But they already have high shares in the emerging markets."