This article is an excerpt from Barronâ€™s 10 favorite stocks for 2021. To see the full list, click here. Â
Coke shares, which are off 4% this year to $53, offer an underappreciated reopening play along with a safe, bond-like 3% dividend yield.
Coke also offers exposure to developing economies and a weaker dollar; 75% of its profits come from outside the U.S.
It is also a restructuring story, as CEO James Quincey has sold bottling businesses to create a capital-light company that is more focused than ever on beverage innovations.
The company remains dependent on carbonated soft drinks, which account for about 70% of sales, but contrary to popular perception, that category is expanding globally.
Coca-Cola / KO
â€œThe beverage industry is a growth industry, and we are the market share leader not just in soft drinks, but also in other major categories, and we are gaining share,â€ Quincey told Barronâ€™s in October. Coke expects to â€œrecover faster than the broader economic recovery.â€
The stock isnâ€™t cheap, trading for 25 times estimated 2021 earnings of $2.11 a share, and the earnings recovery is slowing with Covid-19 lockdowns and other restrictions around the world. But Coke could generate double-digit profit growth when global economies recover and become a must-own consumer stock.
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