Sales are moving in the right direction.
Coca-Cola (KO) is one of the most recognized brands on Earth with a top-10 global brand value. It's a Warren Buffett favorite, and it's the top-selling beverage company in the world.
So it might come as a surprise that Coca-Cola stock has underperformed the broader market for decades. Over the past 10 years, it's delivered a total return of 122%, while the S&P 500 has gained 232% (dividends included).
Coca-Cola has been flexing its brand and pricing power during the inflationary environment, raising prices to match rising costs, and it's generating higher sales and income. Will it finally go back to beating the market this year?
Revitalizing tired sales
You'd have to delve into Coca-Cola's historical performance to get a better sense of why it has been underperforming the market. For a quick glimpse, these charts tell part of the story.
KO Revenue (Annual) data by YCharts
Coca-Cola stock wasn't performing well because the company wasn't. It got a new CEO in 2017, and it took a few years and a global pandemic for it to make the right corrections and get back on track. Actually, just prior to COVID-19, as you can see, it began to turn around.
Sales plummeted again, but Coca-Cola made some major structural changes as the pandemic landed. It restructured its operating groups and slashed its brand portfolio from 400 to 200 brands. Those were bold actions, and they have led to incredible results. Revenue and net income are both rising, and the company is in an excellent cash position.
KO Free Cash Flow data by YCharts
Cash is important for any company, but it plays a major part in Coca-Cola's strategy, since it needs to fund its storied dividend and the accompanying annual raises.
With sales back up, can Coca-Cola stock beat the market?
Believe it or not, Coca-Cola's annual sales are still below where they were 10 years ago. But as they're finally swinging higher, Coca-Cola stock might finally perk up, too. It did beat the market in 2022, when it gained 7% as investors piled into safe stocks and the market dropped 19%. But even though it excelled under pressured conditions last year, it lost 7% while the market rebounded.
In some ways, it's back to where it started 10 years ago, and it can now start ramping up again. But is it likely to beat the market?
Coca-Cola is an established value stock, and these kinds of large, slow-growing secure stocks don't typically beat the market. Coca-Cola's sales increased 7% year over year in 2023, and earnings per share were up 13%. Management is expecting sales to increase a similar amount in 2024 with inflationary pricing moderating at some point.
But such stocks do offer other benefits. Coca-Cola is a classic Dividend King and has raised its dividend annually for 62 years. Its dividend yields 3.2% at the current price, which is more than double the S&P 500 average.
Even if Coca-Cola stock doesn't beat the market this year, it could still be a valuable addition to your portfolio. One reason is the reliable and growing passive income stream. Another is as a value anchor to a diversified portfolio and a hedge for uncertain times, such as when it beat the market in 2022. Even if it doesn't beat the market over the next decade, it's likely to provide gains and value in other ways.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
FAQs
You would have more than doubled your money, with a total investment worth of $2,029.55. That's a 103% return, or a 7.23% annual rate of return. Interestingly, despite co*ke's dominance on the world stage, investing in co*ke's main rival, Pepsi, 10 years ago would have given you more pop for your buck.
What stocks is the Motley Fool recommending? ›
The Motley Fool has positions in and recommends Fiverr International, Home Depot, Microsoft, Netflix, NextEra Energy, Pfizer, and Zoom Video Communications.
What is the future of Coca-Cola stock? ›
The average price target for Coca-Cola is $67.07. This is based on 16 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $72.00 ,the lowest forecast is $58.00. The average price target represents 7.88% Increase from the current price of $62.17.
Is it worth buying Coca-Cola stock? ›
The soda maker is still a great evergreen investment. Coca-Cola (KO 0.29%) is often considered a safe blue chip stock. It owns the world's top soda brand, it generates plenty of cash, and it pays consistent dividends.
Is Coca-Cola good for long term investment? ›
Economic Moat Rating. We believe co*ke has built a wide moat around its global beverage operations, based on strong intangible assets and a significant cost advantage that will enable the company to deliver excess investment returns above its cost of capital over and beyond the next 20 years.
Is co*ke over or undervalued? ›
The intrinsic value of one KO stock under the Base Case scenario is 51 USD. Compared to the current market price of 62.17 USD, Coca-Cola Co is Overvalued by 18%.
What are Motley Fool's 10 best stocks for 2024? ›
The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Fortinet, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal.
What are Motley Fool's 5 top AI stocks you can buy right now? ›
The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Nvidia, and UiPath. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short May 2024 $47 calls on Intel.
What stock is expected to skyrocket? ›
10 Best Growth Stocks to Buy for 2024
| Stock | Implied upside from April 25 close* |
|---|
| Tesla Inc. (TSLA) | 23.4% |
| Mastercard Inc. (MA) | 19% |
| Salesforce Inc. (CRM) | 20.8% |
| Advanced Micro Devices Inc. (AMD) | 30.1% |
6 more rowsApr 26, 2024
"Share a co*ke" Returns with More Names, More Flavors and More Ways to Enjoy Ice-Cold Summer Refreshment | Press Release.
Coca-Cola stock price stood at $62.17
According to the latest long-term forecast, Coca-Cola price will hit $65 by the middle of 2025 and then $70 by the middle of 2026. Coca-Cola will rise to $80 within the year of 2027, $85 in 2028, $100 in 2029, $110 in 2030 and $125 in 2033.
What is the 12 month forecast for Coca-Cola stock? ›
Stock Price Forecast
The 12 analysts with 12-month price forecasts for KO stock have an average target of 68.17, with a low estimate of 60 and a high estimate of 74.
Should I invest in Coca-Cola in 2024? ›
This diversification strategy positions Coca-Cola well in the ever-evolving consumer market. Its extensive global reach and its ability to navigate economic fluctuations worldwide make it an attractive investment in 2024.
Is it risky to invest in Coca-Cola? ›
The weak performance of the stock in the past 12 months reduces the risk that you'll pay too high of a price for this company. Investors have to balance those positive factors against the likelihood that co*ke will report some softer sales trends in the short term.
Should you invest in co*ke or Pepsi? ›
Pepsi is the cheaper stock, but investors might still prefer paying the premium for co*ke over its less expensive rival. Sure, you can own Pepsi for 2.5 times sales, or less than half of co*ke's price-to-sales (P/S) ratio of 5.6. You'll get roughly the same 3% dividend yield in either case.
How much will $1,000 invested be worth in 20 years? ›
As you will see, the future value of $1,000 over 20 years can range from $1,485.95 to $190,049.64.
| Discount Rate | Present Value | Future Value |
|---|
| 20% | $1,000 | $38,337.60 |
| 21% | $1,000 | $45,259.26 |
| 22% | $1,000 | $53,357.64 |
| 23% | $1,000 | $62,820.62 |
25 more rowsThis means that your $1,000 10 years ago — technically, $1,002 — would have bought 60 shares of Tesla. As of Mar. 3, 2024, those 60 shares of Tesla would be worth $12,158.40. That marks a 28.342% annual rate of return.
What if I invested $1000 in gold 10 years ago? ›
According to our calculations, a $1000 investment made in April 2014 would be worth $2,785.93, or a gain of 178.59%, as of April 30, 2024, and this return excludes dividends but includes price increases. In comparison, the S&P 500 gained 172.38% and the price of gold went up 73.14% over the same time frame.
What if you invested $1000 in Google 20 years ago? ›
If you had invested $1,000 in Google stock on Aug. 19, 2004, today, you would have $60,107. Likewise, if you had invested $1,000 in an index fund replicating Nasdaq, you would have $9,000.
