Is The Coca-Cola Company (KO) A Good Stock to Buy?

It has been experiencing growth, albeit only modest growth, so its cheaper valuation is interesting. In addition, Dr. Pepper Snapple boasts a beta of 0.0 and a slightly higher yield than either The Coca-Cola Company (NYSE:KO) or Pepsico.

We can also compare the company to Monster Beverage Corp (NASDAQ:MNST) and Sodastream International Ltd (NASDAQ:SODA). Growth expectations are high with these two stocks, with trailing earnings multiples of more than 30 in each case. Monster is down 18% in the last year, and its net income has skidded a similar amount despite higher sales. The sell-side believes this will reverse, but the forward P/E is still 24 and given the recent results it seems like it might be a short target if anything. SodaStream is quite popular with short sellers, as 38% of the float is held short, but at least for now it has been delivering double-digit growth rates on both top and bottom lines compared to a year ago. Market expectations are certainly high, but it may be worth watching for further results in case its products turn out to be sustainable sources of business as opposed to a fad.

Coca-Cola (and Pepsi) don’t seem to be good value stocks right now, given their premium valuation both on an absolute basis and relative to Dr. Pepper Snapple. With that stock also featuring more attractive defensive characteristics, we think that it is a better place to start looking as an investment in the soft drink industry.

Disclosure: I own no shares of any stocks mentioned in this article.