The beverage industry offers investors plenty of options to quench their thirst for portfolio profits. Constellation Brands (STZ +0.71%) commands a dominant position in the U.S. beer market, while Coca-Cola (KO +0.62%) is recognized for its iconic global soft drink empire.
Despite a long history of both companies rewarding shareholders, the two stocks have diverged sharply in performance at the start of 2025. At the time of this writing, Coca-Cola stock has returned 15% year to date, while shares of Constellation Brands are down 16% over the same period.
Should investors stick with the pop in Coca-Cola for further gains, or can the stars align for Constellation Brands to turn things around? Let's discuss which stock is the best buy right now.
The case for Constellation Brands
Concerns over the strength of the U.S. economy and uncertainties surrounding trade tariffs being implemented by the Trump administration have weighed on stock market sentiment thus far in 2025.
Constellation Brands has been caught up in this recent turbulence, facing a 20% tariff on imports from Mexico, where nearly all its beer, including the flagship Corona and Modelo brands, is bottled and brewed.
Though full details have not yet been disclosed, Constellation faces higher costs per unit that could hit earnings. The company is attempting to mitigate the fallout through a series of strategic responses, including cost cuts, stockpiling inventory, and exploring modest price hikes to support profitability.
NYSE: STZ
Key Data Points
The attraction of Constellation Brands as an investment is that the company remains at the top, with Modelo as the No. 1 selling beer brand in the U.S., capturing a loyal customer following. Even through the disruption, Wall Street analysts project 2% revenue growth this year alongside a solid 12% increase in earnings per share (EPS) to an estimate of $13.46, reflecting the underlying demand and sales momentum.
The silver lining to the stock's deep sell-off in recent months is that its valuation looks compelling. Shares of Constellation Brands are trading at just 13 times its consensus 2025 EPS as a forward price-to-earnings (P/E) ratio, a relative bargain next to Coca-Cola at an earnings multiple closer to 24.
While the uncertainty represents a near-term headwind, fundamentals remain solid, and there is hope that the tariffs are temporary. Investors who believe Constellation Brands will emerge stronger have ample reason to buy and hold the stock.
STZ PE Ratio (Forward) data by YCharts
The case for Coca-Cola
Coca-Cola has largely sidestepped tariff-related pressures by utilizing its strong global supply chain. Its increasingly diverse product portfolio, spanning more than 200 brands including sports drinks, flavored waters, juices, and dairy beverages, reaches far beyond its traditional focus on sodas. It's not a coincidence that shares of Coca-Cola are trading at an all-time high, with several indicators suggesting the company's outlook is as strong as ever.
NYSE: KO
Key Data Points
In 2024 (covering the year ended Dec. 31), Coca-Cola's organic revenue on a constant-currency basis climbed by 14% year over year, capturing the combination of volume growth, higher pricing, and an ongoing premiumization of the sales mix. Full-year adjusted EPS of $2.88 increased by 7% from 2023. Company management expects these trends to continue, targeting further top-line and earnings growth in 2025.
By this measure, the best reason to buy Coca-Cola stock is its proven ability to execute across different macroeconomic environments, representing a source of stability in the market backed by high-quality earnings and cash flow.
Notably, Coca-Cola is on a 63-year streak of annual dividend increases, recently hiking the quarterly rate by 4.8% to $0.51 per share.
Coca-Cola's current dividend yield near 3% is above Constellation Brands' 2.2% yield.
STZ Dividend Yield data by YCharts
Decision time: Buy the dip in Constellation Brands
While holding a bullish view on both stocks, I believe Constellation Brands is the best buy today, with its discounted valuation offering more room to outperform in 2025. Following the significant rally in shares of Coca-Cola this year, I sense that its upside may be limited against a high baseline of expectations it may be challenged to exceed.
For Constellation Brands, its deep sell-off may have already priced in some of the worst-case scenarios, meaning the stock could be better positioned to outperform as upcoming financial results reaffirm its underlying strengths. The stock is a great option to complement a diversified portfolio.
