The stock market has been struggling, with the S&P 500 down around 9% since the start of the year. For many investors, particularly retirees, the priority is preserving capital. The question is: can you protect your savings while staying invested in the market?
One stock to consider is Coca-Cola (NYSE: KO). Known for its stable performance and long-term resilience, Coca-Cola may be a safe investment option during these uncertain times. But is it a good choice for your portfolio?
Coca-Cola’s Global Reach and Strong Margins
Coca-Cola’s biggest strength is its global presence. This worldwide operation gives the company flexibility in times of economic challenges. For instance, when President Donald Trump introduced tariffs on steel and aluminum, Coca-Cola’s CEO James Quincey stated that the company could adapt by using alternative materials like plastic to minimize the impact.
In addition, Coca-Cola has impressive profit margins. Last year, the company earned $10.6 billion on sales of $47.1 billion, which translates to a profit margin of nearly 23%. Even with rising costs, Coca-Cola’s strong margins provide a solid foundation for continuing to generate strong earnings. However, its growth has slowed recently, with earnings growing just 9% between 2022 and 2024.
Coca-Cola Outperformed During the Last Market Crash
During the last major market downturn in 2022, growth stocks plummeted due to inflation concerns. Despite this, Coca-Cola’s stock showed resilience. Including dividends, the stock’s total return was over 10%, significantly outperforming the S&P 500.
Historically, Coca-Cola has been a low-volatility stock, with a beta of 0.45, meaning it tends to move less than the overall market. For investors looking for safety, this makes Coca-Cola an attractive option. However, it’s important to remember that past performance doesn’t guarantee future results. While Coca-Cola successfully passed on higher costs to consumers during periods of high inflation, it may face challenges doing the same now as many consumers tighten their spending.
Is Coca-Cola Stock a Good Choice for Risk-Averse Investors?
For risk-averse investors, Coca-Cola can be a good place to park money. The company offers a reliable 2.9% dividend, making it a solid option for those seeking stable income. While Coca-Cola’s growth prospects may not be as strong as other stocks, its strong business foundation and stable dividend make it an ideal choice for those who want to limit risk.
Should You Invest in Coca-Cola Stock Right Now?
Before investing in Coca-Cola, consider this: the Motley Fool’s Stock Advisor team recently identified their top 10 stock picks, and Coca-Cola didn’t make the list. The stocks that did have strong potential for future growth.
For example, when Netflix and Nvidia were selected for Stock Advisor in the past, early investors saw returns of over 50,000%. With Stock Advisor’s total average return at 800%, far outpacing the S&P 500’s 156%, you may want to explore these new picks for potentially higher returns.
In conclusion, Coca-Cola offers stability and reliable income, but if you’re looking for high growth, other options may be more suitable.
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