Why This "Boring" Stock Is a Strong Buy Right Now
Key Points
Coca-Cola’s evergreen business model is well-insulated from macro headwinds.
It’s a great stock to buy, hold, and forget for income-oriented investors.
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Coca-Cola (NYSE: KO) is often considered a boring blue chip stock, owned for income and stability rather than robust growth. Yet over the past five years, its stock has rallied nearly 50% and generated a total return of more than 70%. Let's see why Coca-Cola's stock rose, and why it's still a strong buy right now.
Image source: Coca-Cola.
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Why is Coca-Cola still a strong buy?
Over the past few decades, Coca-Cola has launched and acquired more brands of bottled water, teas, fruit juices, sports drinks, energy drinks, coffee, and even alcoholic drinks. It also refreshed its flagship sodas with healthier versions, smaller serving sizes, and new flavors.
That expansion enabled Coca-Cola to consistently grow its earnings, even as soda consumption rates declined across several of its largest markets. Coca-Cola also maintained high margins by only selling its concentrates and syrups to independent bottlers, which handled the capital-intensive process of producing and distributing its finished drinks.
From 2020 to 2025, Coca-Cola's comparable EPS rose from $1.95 to $3.00, while its adjusted free cash flow grew from $8.7 billion to $11.4 billion. For 2026, it expects its organic revenue to rise 4%-5% and its comparable EPS to increase 8%-9%. That steady growth indicates it's well-insulated from inflation and other macro headwinds.
Coca-Cola's stock still looks reasonably valued at 24 times forward earnings, it pays an attractive forward yield of 2.6%, and it's raised its dividend annually for 64 consecutive years. So if you're looking for a safe stock to buy, hold, and forget, Coca-Cola checks all the right boxes.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
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Leo Sun has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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