With the Market in Turmoil, Is Coca-Cola a Buy, Sell, or Hold?

Any investor who thinks stock prices always go up and to the right on a smooth journey got a wake-up call this year. The S&P 500 (SNPINDEX: ^GSPC) was down 7% from the start of the year to March 30. Besides persistent economic uncertainty, the Middle East conflict and fears of artificial intelligence (AI) disruption are troubles on everyone's mind.

April has brought some positivity. The benchmark has risen nearly 7% through the first two weeks of this month. Nonetheless, investors have no shortage of reasons to worry about what the future will bring.

With the market seemingly on the brink of turmoil at any moment, maybe it's time to consider a safe stock for your portfolio. Here's where Coca-Cola (NYSE: KO) deserves some attention. Is it a buy, sell, or hold right now?

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Coca-Cola is one of the easiest businesses to own

The worst stocks to own are those that require investors to constantly keep up with the latest news, are difficult to understand, and are in weak financial positions. Coca-Cola could not be further from this sort of high-maintenance opportunity. And that's perhaps its best attribute.

Coca-Cola is a boring company that's basically been conducting the same operations for decades. It's easy to grasp how it makes money, mainly by selling concentrates and syrups to bottling partners. And it's extremely profitable, with a trailing-five-year average net profit margin of 27%. This supports a robust dividend payout that has increased in 64 straight years.

From a consumer's point of view, buying low-cost beverages is something that won't stop even in recessionary times. This means investors don't have to worry about changing macro forces and the impact they can have on Coca-Cola's business. And there is no need to think about when the next period of market turmoil will come.

The company's incredible brand has propelled its success throughout history. This makes up Coca-Cola's wide economic moat, protecting its competitive position.

Here's how to view this beverage stock from an investment perspective

For risk-averse investors, the steady, predictable nature of this business is the most compelling feature, even though the returns in the future likely aren't going to outperform the S&P 500. Coca-Cola shares are a no-brainer buy for these investors, as the company can provide a stable foundation in a diversified portfolio.

Since I'm after higher investment gains, I'm not considering buying this stock. In the past 10 years, Coca-Cola's total return of 127% comes up significantly short of the S&P 500 index's 297% total return. I see no reason that this trend won't continue going forward.

Neil Patel 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.