Coca-Cola (KO -0.62%) will likely be selling many more beverages in a few years than it did in 2024. There’s little to challenge the beverage giant’s dominant global network, which accounts for billions of servings of drinks consumed each year, including both sparkling and nontraditional drinks like teas and sports drinks. Coke sold 33.3 billion cases of its products in 2023, up from 32.7 billion a year earlier .
Yet those successes don’t make the stock an obvious winner for 2025 and beyond. Coke was one of the worst-performing stocks on the Dow Jones Industrial Average this past year, after all. So, just how confident should investors be in Coca-Cola shares, moving forward. Let’s take a closer look.
A flat 2024
Coke’s sales trends have been impressive lately, with organic revenue rising 12% through the nine months ended in late September. There’s a catch, though. Almost all of those gains have come from higher prices. Coke notched just 1% increased volume in the period, in fact.
That’s not a sustainable pathway for moving sales higher, and it helps explain why investors are souring on the stock these days. Without a better balance between price and volume gains, Coke will find it hard to grow quickly enough to keep its shareholders happy.
But the flip side to that negative is that the company successfully passed along all of its rising prices to its customers while protecting sales volumes. That’s a reflection of its market leadership position and the affinity that so many people have for Coke’s beverages.
Holding profits
That’s no reason to abandon this cash-rich dividend giant, though. Even through the difficult consumer selling environment of 2024, the company managed to increase operating profit margin to a blistering 29% of sales. That’s more than double PepsiCo‘s rate and a few percentage points above Monster Beverage‘s.
KO Operating Margin (TTM) data by YCharts
In other words, there’s still just one standout global winner when it comes to the consumer beverage industry. Coke’s premium status doesn’t mean its stock will beat the market every year, but it does help protect shareholders against large losses during those inevitable economic downturns.
Returns and costs
Coke shares provide another bonus in that the stock yields over 3% here in late 2024, or more than double what an investor could earn from owning the wider Dow. Only four stocks are currently paying a higher yield on the Dow, in fact: Verizon Communications, Chevron, Amgen, and Johnson & Johnson. Stock buyback spending is a smaller but significant cash return channel for Coke shareholders as well, at about $1.2 billion over the last nine months.
Coke’s stock valuation doesn’t seem too disconnected from its business prospects today. You can buy shares at 26 times earnings for a modest premium over the less profitable Pepsi. Faster-growing Monster Beverage, on the other hand, will cost you 34 times earnings.
As a result, owning Coca-Cola stock in 2025 and beyond will likely provide an investor with modest sales growth and above-average annual earnings expansion. Add in a hefty dividend, and you’ll see decent returns that will nevertheless often be overshadowed by more popular segments of the market. These factors suggest the stock is a hold for most portfolios today.
However, Coke could be worth buying for 2025 if you’re worried about a market slump or would like exposure to a quality company that doesn’t derive value from speculative sectors like artificial intelligence (AI), which have rallied significantly over the past two years.
Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Monster Beverage. The Motley Fool recommends Amgen, Johnson & Johnson, and Verizon Communications. The Motley Fool has a disclosure policy.
