Coca-Cola (KO 0.91%) has been having a banner year. After trailing the market for most of the past three decades, it's beating the market in 2025, up 15% at the time of this writing, while the S&P 500 is up 3%.
It might be able to keep that streak going if certain conditions are met. Let's see how that could happen and what it means for investors.
Why Coke is climbing
Coca-Cola is the largest beverage company in the world, with $48 billion in trailing-12-month sales. It owns about 200 brands, 30 of which each generate at least $1 billion in sales. Its beloved brands have pricing power, but because they're beverages, they're not the kind of luxury items people can't afford when there's economic pressure.
Even in harsh conditions like the current economy, where shoppers are cutting back on spending, Coca-Cola is demonstrating resilience. For all of its trailing the market, it tends to outperform when investors are worried and they flee to safe stocks.
Image source: Getty Images.
In the current climate, though, it has an extra advantage: It has low exposure to tariffs, and the market is picking up on that. Management has a localized approach to production, and most of its U.S. products are made domestically.
That includes its concentrate, which is made in the U.S. for U.S.-sold beverages, unlike PepsiCo, whose syrup is produced in Ireland. Since Coca-Cola relies on local production for most of its products globally, it's also well positioned to get through any trade wars that may develop.
In the first quarter, unit case volume was up 2% year over year, and the company grew market share in all of its beverage categories, which include sparkling drinks, milk, juice, and tea and coffee.
Organic revenue was up 6%, and adjusted operating income was up 10%. Comparable operating margin was 33.8%, up from 32.4% last year, and comparable earnings per share (EPS) inched up to $0.73.
These are strong results from an industry leader facing pressured conditions, which is why Coca-Cola is so reliable.
How it could keep it up
Is it the ultimate hedge stock? Will it go back to being a market laggard when the economy improves, like it has for most of the past 30 years? Not necessarily, because it is a different company today.
When current CEO James Quincey came on board in 2018, revenue was still sinking, and the company was just starting to make strides in the right direction before the pandemic hit and sales plummeted again. But management took the opportunity to become leaner and more agile, slashing its brand portfolio in half and restructuring its segments.
It emerged much stronger, and that's helping it weather the current storm. Just last year, revenue finally eclipsed record highs from 10 years ago.
KO Revenue (TTM) data by YCharts; TTM = trailing 12 months.
Profitability is following from the better sales performance, and EPS is also at a 10-year high.
Coca-Cola is now in a much better position to spring forward. It has so many levers to boost growth, such as changing packaging in regions where it needs to be more affordable, and launching larger marketing campaigns where it's looking to build trust and launch new products and flavors.
It has organic opportunities in overall beverage industry growth, which it expects to increase in the mid single digits over the next few years. As the leader in the space, that's no-brainer growth.
NYSE: KO
Key Data Points
And even though Coca-Cola seems like it's everywhere, that's not the case all over the world. It says that 80% of the world's population is in emerging markets, where it has only 7% market share. In developed markets, it has 14%, giving in plenty of room to capture more, which it's doing by releasing new drinks and attracting more customers.
Lastly, even though it has streamlined its product portfolio, it's still acquiring new global brands that are easily integrated into its distribution system, adding high-margin revenue.
Should you buy the stock?
If the company can maintain robust growth and keep reaching highs, it might enter a new era of market-beating growth. However, as a mature, established business, it may not be able to generate high-enough growth to achieve that.
In any case, Coca-Cola stock can add value to an individual portfolio through its safety and protection, as well as its storied, rock-solid dividend.
