Where Will Coca-Cola Stock Be in One Year?

The stock of Coca-Cola (NYSE: KO) is trouncing the market this year, up 16% while the S&P 500 is down 4%. It's a rare switch, because the stock typically lags the market. There's a lot of fear about the economy right now, and that's when investors switch to safe stocks like Coca-Cola.

Now is when you get to see what investors prize in this kind of stock: stability and a dividend, which are hard to beat. Can it maintain these gains? Let's see where shares could be this time next year.

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The forever Buffett stock

Coca-Cola is one of investing legend Warren Buffett's favorite stocks. He has sung its praises many times and said that Berkshire Hathaway would own its shares as long as he was in charge of it.

Buffett loves its strong brand name and products that are always in demand. Coca-Cola is the largest beverage company in the world, with $47 billion in trailing-12-month sales.

It has had some pressure in the past, but under the leadership of James Quincey, who was named CEO in 2016, the company staged a strong comeback despite severe economic volatility over the past few years.

The company ended 2024 in a healthy position. Revenue increased 3%, and organic revenue, which strips out the effect of acquisitions and other impacts, was up 12%. Full-year earnings per share (EPS) were down a penny to $2.46, and comparable EPS rose 7% to $2.88.

Buffett also loves Coca-Cola's dividend. The company is a Dividend King, having raised its payout annually for the past 63 years, an almost unbeatable track record.

Unlike many Dividend Kings, which are valuable exclusively because of their reliability, it also offers a high yield. It's usually around 3%, but it's about 2.8% recenty because the stock is so high.

Can Coca-Cola keep it up?

The likelihood is that the company does not maintain these kinds of gains. When the economy is stable and thriving, investors tend to lean toward growth stocks, prizing safety and value less than in times of uncertainty.

A stock like Coca-Cola will typically gain at a steady but slow pace. It has trailed the market for most of the past 30 years and occasionally will beat it. Unsurprisingly, that happens when the market is down.

So, it depends to an extent on what's happening in the economy. As long as tariffs are on the table and trade wars start up, Coca-Cola stock could enjoy some serious confidence. If the trade wars die down, enthusiasm for the stock could, too.

However, many investors love Coca-Cola for the same reasons Buffet does: It's a solid business with a reliable passive income stream at all times. But there's more growth happening today, and even more to come in the future, since there are still markets to conquer and new beverages to launch.

Management estimates that it has 14% of the market for its beverages in developed countries and only 7% in undeveloped regions, which account for 80% of the world's population.

It typically supercharges its growth through acquisitions, which it can seamlessly blend into its global distribution system. Because it's under some pressure with the changing economy, it might not dabble in any new purchases over the next year, but it's innovating in other ways. It has experimented with packaging to meet demand at lower price points, and it's heavily into the artificial intelligence (AI) trend, using it to pinpoint demand by location and track its distribution system the most effectively.

For 2025, management is guiding for 5% to 6% organic revenue growth, 8% to 10% comparable EPS growth (currency neutral), and $9.5 billion in adjusted free cash flow. Those are better numbers than last year, which is another reason the market is enthusiastic about the stock right now. Coca-Cola will provide its first-quarter earnings report at the end of this month, and investors will have the opportunity to see how it's playing out so far.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.