Better Buy in August: Celsius Down 42% This Year or a 50/50 Split of Coca-Cola and Pepsi?

For investors staring at a Celsius (NASDAQ: CELH) chart that looks like a ski slope, it is tempting to ask whether the post‑earnings pain has created a bargain.

I think the better move in August is simpler and less dramatic: Skip the niche energy‑drink hype and put new money into a 50/50 split between Coca‑Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP) instead.

Image source: Getty Images.

Celsius' painful reset

Celsius' second-quarter numbers were the kind that force a reset. The company reported revenue of about $818 million, up roughly 11% year over year but more than $50 million below analyst expectations, marking its first top‑line miss in five quarters.

What really spooked the market was the flagship brand. Celsius said revenue for its namesake energy drink declined about 11.7% year over year, citing heavier trade and promotional spending, shipment timing related to inventory rebalancing, softness in the club channel, fewer new launches, and SKU pruning tied to recent acquisitions. The stock dropped about 17% on the day but has since regained lots of its losses. It seems the market is questioning whether Celsius is still a hyper‑growth story or more of a maturing niche brand that has to fight harder for share.

To me, the issue is not that Celsius is doomed. It is that the margin for error is tiny. The company operates in a crowded energy‑drink space, leans heavily on a specific lifestyle positioning, and has little room for error while investors remain mentally anchored to its earlier triple-digit-growth years. When brand sales go negative and guidance wobbles, you are taking on real execution risk.

What Coca‑Cola and Pepsi just showed

Meanwhile, Coca‑Cola and PepsiCo just posted the kind of quarters you want if your goal is to generate steady, long‑term returns from beverages.

In late July, Coca‑Cola reported net revenue up 7% to $13.4 billion, organic revenue up 6%, unit case volume up 5%, and EPS up 16%. Operating margin hovered around the mid‑30s, free cash flow year‑to‑date was about $6.9 billion, and the company gained value share in total nonalcoholic ready‑to‑drink beverages.

PepsiCo's second quarter showed net revenue up 6.4% to $24.18 billion, with organic revenue up 2.4%, core operating profit up 4%, and core EPS up modestly despite North American volume pressure. Management left its full‑year guidance intact, still targeting organic revenue growth of 2% to 4% and core EPS growth of 4% to 6%. It is not flashy, but it is solid, diversified growth backed by a portfolio that spans salty snacks, sodas, waters, teas, and energy drinks.

Importantly, both Coke and Pepsi are global systems businesses with deep distribution networks, strong balance sheets, and long dividend histories. They are built to absorb category shifts, regulation, and currency swings in a way Celsius cannot yet match.

Why the 50/50 split looks better right now

Against that backdrop, Celsius at around a 40% drawdown might look cheap, but you are effectively betting that the brand re‑accelerates, margins recover, and competition does not erode its positioning. That can work, but it is a narrow, brand‑specific thesis with real downside if execution or trends go the wrong way.

A 50/50 split between Coca‑Cola and PepsiCo is the opposite kind of strategy. You are buying into two of the most durable beverage ecosystems on the planet, each with dozens of brands across price points and categories, solid mid‑single‑digit revenue growth, double‑digit EPS growth or guidance, and significant free cash flow that funds dividends and buybacks. You also get diversification across geographies and categories -- when North American soda volumes soften, snacks or emerging markets often offset the drag.

There are risks here, too -- sugar taxes, changing tastes, and valuation that is not dirt cheap -- but they are the kind of long‑horizon challenges that world‑class management teams have navigated for decades. For investors looking in August for a beverage play they can actually hold for years, the calmer choice is clear to me: Let Celsius prove it can grow through this reset and, in the meantime, use new money to own the broad, cash‑rich engines at Coca‑Cola and PepsiCo rather than a single bruised niche brand.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool recommends Celsius Holdings. The Motley Fool has a disclosure policy.