I'm not sure how old I was when I got my first collectible from Coca-Cola (KO) but it's a hobby that's continued for decades. My love of Coca-Cola really got going after I visited the World of Coca-Cola museum in Atlanta in the 1990s. There I was exposed to the iconic red and white memorabilia more than ever before.
That legendary Coca-Cola branding is reportedly recognizable to 94% of the world's population. For perspective, more people recognize the Coke branding than have running water -- it's almost incomprehensible the reach this business has.
Coca-Cola is a beloved brand and it's also a beloved stock. Investors can't track the top holdings on Robinhood Markets anymore. But back when you could, Coca-Cola stock was regularly within the top 100 most-held stocks on the platform, counterintuitively right next to a plethora of meme stocks.
The popularity of Coca-Cola stock is surprising to me. Over the last decade, it's been a below-average performer when compared to the S&P 500 and it's not even close.
KO Total Return Level data by YCharts
It seems that Coca-Cola is so well-known that people want to invest, assuming it will be a good performer. However, buying the KO stock symbol isn't the only way to invest in Coca-Cola. In fact, there's more than one Coke stock and some investors have ridden one of the others to market-crushing gains.
Another way to invest in Coca-Cola's success
Coca-Cola partners with over 200 independent bottlers around the world to produce its beverages. One of these is Coca-Cola Consolidated (COKE -1.03%). This bottling company is Coca-Cola's largest partner in the U.S. But Coca-Cola Consolidated also partners with Keurig Dr Pepper and Monster Beverage to distribute some of their products.
Coca-Cola Consolidated stock has been a better investment than Coca-Cola by a mile. And the 10-year chart below shows steady gains throughout the decade, suggesting its performance isn't just a fluke -- something positive is happening here.
COKE Total Return Level data by YCharts
The performance of Coca-Cola Consolidated stock appears to be the direct result of operational excellence. The company has grown revenue by gaining control over more distribution territories. And by investing in its business, it's simultaneously recognized cost savings, resulting in big profit gains.
Indeed, the chart below shows that the gains for Coca-Cola Consolidated stock match its gains in operating income. In other words, the stock is up in proportion to its profit growth, which is exactly what one would expect over the long haul.
COKE Operating Income (TTM) data by YCharts
Which stock is the better buy today?
In my view, Coca-Cola Consolidated stock is clearly a better buy today compared to Coca-Cola stock. Its operating margin is currently 13.1%. For comparison, it was below 10% just a couple of years ago. The company has worked hard to improve its profitability, and management believes it can sustain its improvements. In short, investors can likely expect a high level of profitability going forward.
The increased profitability is doing wonders for Coca-Cola Consolidated's balance sheet. For the first time in 40 years, it has more cash than debt.
Moreover, Coca-Cola Consolidated stock is cheap compared to its profits. As of this writing, it has a market capitalization of $8.4 billion but it's generated $712 million in trailing-12-month operating income. Relatively speaking, that's a lot of profit compared to the value of the company and it positions the stock well for gains.
Coca-Cola Consolidated pays a quarterly dividend of $0.50 per share, which looks laughably low considering its stock price is over $900 per share. However, the company has paid a special dividend two years in a row, including last year's special payout of $16 per share.
Therefore, Coca-Cola Consolidated does look to reward its shareholders. And as its profits continue pouring in during coming years, I would expect that to continue.
To be fair, Coca-Cola Consolidated's growth could be somewhat limited because there are only so many distribution regions to control. And there are limits to how high it can push its operating margin. So investors shouldn't expect profit growth like what it's experienced in recent years.
However, Coca-Cola Consolidated stock is cheap and it has options when it comes to returning cash to shareholders. Therefore, I believe this stock could make up a solid part of a portfolio of stocks.
