Jennifer Saibil, The Motley Fool

Fri, Jun 20, 2025, 2:18 PM5 min read

• Coca-Cola has a well-established brand and reliable, strong sales even in difficult conditions.

• It's well equipped to handle tariffs or trade wars because most of its production is local.

• After sinking for several years, revenue and profits are at all-time highs.

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Coca-Cola (NYSE: KO) 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.

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.

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.

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.