Coca-Cola Stock: Next Stop $100?
Key Points
Coca-Cola reported double-digit revenue growth and a 35% operating margin in Q1.
The stock’s price-to-earnings ratio is in line with its trailing-five-year average.
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In the past five years, Coca-Cola (NYSE: KO) has climbed 53% (as of July 9). While this gain has significantly lagged the overall market, the company has been a safe holding in portfolios due to the predictable nature of its operations. And it's hard to deny its current dividend yield of 2.57%.
Is this beverage stock heading to $100?
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Coca-Cola continues to post solid financial results, supporting the view that this is a high-quality business. During the first quarter (ended April 3), the company reported $12.5 billion in revenue, up 12% year over year. And its operating margin was a stellar 35%.
Macro headwinds are no match for Coca-Cola, which benefits from durable demand. It leans on its strong brand to drive financial success.
Investors shouldn't ignore valuation in their research process. Right now, Coca-Cola shares trade at a price-to-earnings ratio of 26. This is in line with its trailing-five-year average, suggesting a fairly valued stock.
The share price will surely rise 21% to hit $100 in the future. It's only a matter of time. However, it's anyone's guess when this milestone will be reached. It could happen in 2026. It could also take three years or longer.
This is an outstanding business. But investors shouldn't buy Coca-Cola if they're seeking outsize capital appreciation.
Should you buy stock in Coca-Cola right now?
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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.
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