While taking massive risks for possibly big short-term gains is exciting, there is something to be said for playing the long game with a “boring” yet consistent stock. Coca-Cola (NYSE: KO) is such a company. Favored by investor Warren Buffett, Coca-Cola delivers a strong and predictable financial performance. The company’s revenue for the past year ending March 31 was $46.07 billion, which is a year-over-year increase of 5.93%.

The company’s gross margins are consistently above 40%, making it highly sustainable. The beverage giant makes a lot of money with marginal overhead costs, allowing it to invest in buybacks and pay its shareholders dividends—most recently, $0.48 per share. Its beverage brands are very strong, and it has consistent earnings growth through thick and thin economic times. It has regularly raised its dividend over 62 consecutive years.  

The Bigger Picture

Soda consumption has been on the decline globally. Among teenagers, for example, soda consumption has dropped by 60% in the past 15 years. Overall, the public is demanding healthier beverages. Coca-Cola has responded by expanding its product portfolio with its brands of bottled water (Dasani, smartwater), sports drinks (BodyArmor, Powerade), teas, energy drinks, fruit juices (Minute Maid), and coffee. The company continues to diversify its products to include low-sugar as well as no-sugar alternatives, adapting its business model to keep up with its customers’ preferences. Coca-Cola even owns alcoholic beverage brands like Makers Mark, Canadian Club, and Jim Beam.

What’s Next For Coke?

Coca-Cola continues to innovate with new beverages and leverage technology and consumer trends to gain a greater marketing advantage. New drinks include Coca-Cola Spiced, Flashlyte (advanced hydration), smartwater alkaline, and its Alcohol Ready-to-Drink category (e.g., Jack Daniel’s & Coca-Cola and Absolut Vodka & Sprite in Europe).

They also have a consumer-engaging test-learn-scale approach to new products and curate cultural experiences around their brands. Focusing on customers’ passions like music, sports, food, and gaming, the company invests in reaching consumers through digital, retail, and live experiences.

 Based on 19 analyst recommendations, KO is currently a Strong Buy with a consensus 12-month price target of $67.8.

Neither Julie Stoller nor Stocks.News have positions in this company.