Still Time to Buy Coca-Cola Stock as a Defensive Hedge?

The consumer staples sector typically draws interest during economic downturns as consumers buy these products regardless of economic conditions. Seeing as beverages are one of the most essential consumer items, Coca-Cola KO stock is historically known to be a pleasant hedge against market volatility when economic uncertainty arises.This scenario is playing out with President Trump’s “Liberation Tariffs” rocking markets over the last few trading sessions. Amid the mayhem, Coca-Cola's stock hit a 52-week peak of $73 a share last Thursday and is sitting on +9% gains this year compared to the S&P 500’s 14% decline and rival PepsiCo’s PEP 6% drop.Image Source: Zacks Investment Research Brand Recognition & Institutional Ownership Thanks to its global presence as one of the most recognized brands in the world, Coca-Cola’s stock has remained a primary holding of many mutual, pension, and hedge funds. Limiting panic selling that may arise from retail investors, 70% of Coca-Cola shares are owned by institutional shareholders including Berkshire Hathaway BRK.B, Blackrock BLK, and Vanguard Group.What also helps Coca-Cola navigate more sensitive economic fluctuations is the company’s core focus on its flagship soda and other drink products as opposed to Pepsi, which has a diversified portfolio of snack products that can see demand wayward. Dividend Reliability While Coca-Cola and Pepsi both share the prestigious Dividend King title, it’s noteworthy that Coca-Cola still has the reliability edge. Having a current annual dividend yield of 2.92%, Coca-Cola has increased its dividend for 64 consecutive years while Pepsi has done so for 53 consecutive years.   Image Source: Zacks Investment Research Coca-Cola’s Steady Growth  Coca-Cola is expected to post 2% sales growth in fiscal 2025 with its top line projected to expand another 5% in FY26 to $50.49 billion. Furthermore, annual earnings are slated to increase by 3% this year and are projected to spike another 8% in FY26 to $3.20 per share.Image Source: Zacks Investment ResearchKO Valuation Comparison Following its most recent rally, Coca-Cola stock trades at a 23.6X forward earnings multiple which is slightly above its Zacks Beverages-Soft drinks Industry average of 19.1X and Pepsi’s 17.7X. However, KO does trade beneath its decade-long high of 28.5X forward earnings and is on par with the median of 23.4X during this period.Image Source: Zacks Investment Research Bottom Line For now, Coca-Cola stock lands a Zacks Rank #3 (Hold). Despite trading at a premium to its peers in terms of P/E valuation, Coca-Cola stock has lived up to the notoriety of being a reliable defensive hedge against economic uncertainty. After recently hitting 52-week peaks there could be better buying opportunities but holding KO shares may be ideal as markets adjust to the implementation of an ongoing trade war.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report BlackRock (BLK): Free Stock Analysis Report Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis Report Get Your Free (VADGX): Fund Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks