Who would have thought that your favorite soft drink maker could hold up so well during a period of tariff-driven market volatility? In fact, Coca-Cola stock (NYSE: KO) has recently reversed its short-term downtrend, suggesting there may be further upside ahead.
We believe adding it to your portfolio could be a smart move to diversify risk and enhance resilience during market downturns.
For those seeking less volatility than individual stocks, consider the High-Quality portfolio, which has outperformed the S&P 500 and delivered returns of over 91% since its inception.
Coca-Cola’s stock has shown strong technical momentum, with its 50-day moving average recently rising above the 200-day moving average in a bullish “golden cross” formation.
Furthermore, the current share price is trading above both these key levels, indicating a potential shift in trend and growing upward momentum—even as the broader market remains volatile due to tariff issues. Investors aiming to lower risk in their portfolios may find Coca-Cola appealing for several reasons:
- Although Coca-Cola’s revenue growth isn’t explosive, its business model generates strong cash flows, with a notable 25% margin from operations over the past four years. This supports stability and continued shareholder returns during tough times.
- As a globally recognized consumer brand, Coca-Cola is categorized as a staple product. This is particularly important in economic downturns, as demand for its offerings tends to remain stable even when discretionary spending falls.
- With operating margins near 30%, Coca-Cola enjoys significant financial flexibility to manage through market challenges.
- Its widespread presence across global retail networks ensures consistent brand exposure and accessibility.
- The company is especially resilient to tariff-related challenges due to:
- Strong pricing power to offset supply chain or cost pressures
- Localized production that limits exposure to cross-border tariffs
The combination of these technical indicators and Coca-Cola’s solid fundamentals make the stock a strong candidate for investors seeking portfolio stability in uncertain times. KO stock is currently trading at 24 times its projected 2025 earnings of $2.94, consistent with its historical average price-to-earnings ratio.
But if KO doesn’t spark your interest, consider Trefis’ High Quality Portfolio, a curated basket of 30 stocks. This portfolio has consistently outperformed the S&P 500 over the past four years. Why? Because as a group, HQ Portfolio stocks have delivered higher returns with lower volatility compared to the index—a smoother ride as seen in HQ Portfolio performance metrics.
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