Where Will Coca-Cola Stock Be in 5 Years?
Coca-Cola has implemented this strategy historically via acquisitions. Most recently, it purchased Costa in 2018 for $5.1 billion. Before that, the company bought Topo Chico in 2017. There are now more than 200 different drinks under the Coca-Cola umbrella, and it wouldn't be surprising if another acquisition happens before the end of the decade.
Expect past trends to continue
Investors are familiar with the saying that past performance is not indicative of future results. This is something to always keep in mind when thinking about stocks and how they might do in the future. We can't simply extrapolate historical data, since companies are always evolving.
But with Coca-Cola, I believe it's reasonable to assume that past trends will continue. In the trailing-five-year period, the stock has dramatically underperformed the S&P 500, putting up a total return that's about half of the broader index's gain. There's no reason to believe it will be able to outperform the benchmark between now and the end of 2030. I expect it to lag the S&P 500.
That's because this is a mature company. Consequently, it won't suddenly report incredible revenue and profit growth. If this did happen, which I view as extremely unlikely, then there would be a high probability that the stock would do very well.
This muted outlook doesn't mean it's off-limits as a potential investment; it just depends on your goals. If you want outsize growth potential, then this stock should be avoided. However, if it's safety, stability, and predictability that you're after, Coca-Cola could be a worthwhile portfolio addition.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Where Will Coca-Cola Stock Be in 5 Years? was originally published by The Motley Fool
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