We recently published a list of 10 Best Consumer Staples Stocks to Buy According to Analysts. In this article, we are going to take a look at where The Coca-Cola Company (NYSE:KO) stands against other best consumer staples stocks to buy according to analysts.
Is the US Economy Headed for a Recession?
Consumer confidence is plunging in the US. It dropped further in March, with the Conference Board reporting the future outlook falling to the lowest level in more than a decade. The Conference Board’s monthly confidence index dropped to 92.9, reflecting a 7.2-point slip and making March the fourth consecutive month of index contraction. The index calculates respondents’ outlook on job prospects, business, and income. The fall was higher than analyst estimates, as economists surveyed by Dow Jones estimated a reading of 93.5.
That is not all: the measure for future estimates is painting an even bleaker story with the index falling to 65.2, reflecting a 9.6-point drop and making it the lowest number in 12 years. The reading is also considerably below the 80 level, which is typically considered a benchmark signal for an incoming recession.
While the confidence drop was spread across income groups, it was primarily driven by a decline in consumers aged 55 or older. These readings are materializing at a time uncertainty and concerns regarding President Trump’s tariffs are already looming on the market. These concerns have coincided with other surveys exhibiting waning consumer sentiment and a volatile stock market. CNBC reported that Stephanie Guichard, senior economist, global indicators at The Conference Board, said the following about the situation:
“Consumers’ optimism about future income — which had held up quite strongly in the past few months — largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”
On March 14, CNBC reported that while headwinds like persistent inflation and high interest rates were already affecting companies, they now have to deal with additional obstacles such as worsening consumer sentiment, tariffs that go on and off, and mass government layoffs. Over the last weeks, investor presentations and earnings calls have shown a distinct trend: consumer-facing businesses and retailers are warning that fiscal Q1 2025 sales are coming in softer than expected. 2025 may prove to be a year tougher than what analysts initially estimated.
READ ALSO: 11 Best Coffee Stocks to Buy Now and 10 Best Department Store Stocks to Invest in.
Consumer Staples: Are They a Safe Haven Amid Recession Concerns?
Consumer staples are generally considered a safe haven amid recession and market volatility. We discussed how the consumer staple sector is expected to perform and whether it can be considered a safety net amid the current market dynamics in a recently published article on 12 Best Household Stocks to Buy According to Hedge Funds. Here is an excerpt from the article to shed light on the situation:
“On March 21, Bryan Spillane, Bank of America Securities’ senior food and beverage analyst, appeared on CNBC’s ‘The Exchange’ to discuss things across his space and the trends surrounding consumer staples. He said that going through the first quarter of the year and having check-ins with companies has led him to conclude that the conditions in the sector have been soft, which is true across his entire coverage universe. Consumers are pulling back a bit, and there’s uncertainty surrounding the conditions in the sector. What’s surprising is that these trends started in January and extended through the first quarter.
The sector, however, is showing a dichotomy. Spillane believed this is a market for consumer staples, as we are looking for defensiveness and certainty. But at the same time, we are doing that at a time when the fundamentals appear to be decelerating. This creates a dynamic for investors to really understand the market and where it would be best to put their money in, as not all seem as safe as they would typically be.
These trends have resulted in concerns about whether staples would be less of a safe haven this time around. Addressing these concerns, Spillane said that staples would still be a safe haven if we consider them relative to the world we are living in. Large liquid consumer staples are still a place investors would want to be if they are looking for a place to hide in uncertainty, as they are likely to generate considerable cash flows and pay dividends.”
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 40 consumer staple stocks popular among hedge funds and selected the top 10 with the highest analyst upside potential as of March 28, 2025. We also added the number of hedge fund holders for each stock, as of Q4 2024. The list is ordered in ascending order of analyst upside potential. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A row of factory workers assembling bottles of sparkling soft drinks on a conveyor belt.
The Coca-Cola Company (NYSE:KO)
Analyst Upside: 11.40%
Number of Hedge Fund Holders: 81
The Coca-Cola Company (NYSE:KO) manufactures and markets non-alcoholic beverages. It has a range of water, sports, coffee, and tea brands, including Costa Coffee, Georgia Coffee, Gold Peak Tea, Fuze Tea, and more.
The company holds 28% of the global market value in its non-alcoholic, ready-to-drink beverages categories, lending it a significant market position. It has a global presence and yet holds a considerable opportunity to capture market share, especially in the non-developed global regions. The Coca-Cola Company (NYSE:KO) recently announced its 63rd consecutive annual quarterly dividend increase of 5.2%, from $0.49 to $0.52.
In a report released on March 19, Robert Moskow from TD Cowen maintained a Buy rating on The Coca-Cola Company (NYSE:KO), with a price target of $78.00. He said the company holds a competitive edge due to its robust relationships with bottlers and effective marketing and procurement strategies. In addition, The Coca-Cola Company’s (NYSE:KO) focus on digitalization and enhancing bottler communication has bolstered its operational efficiency, further supporting the analysts’ bullish outlook on the stock. It ranks seventh on our list of the best consumer staples stocks to buy according to analysts.
Overall, KO ranks 7th on our list of best consumer staples stocks to buy according to analysts. While we acknowledge the potential of KO, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
