There are brewing opportunities in these 2 beverage stocks

Despite macroeconomic headwinds, the beverage industry is expected to stay afloat due to the growing consumer inclination towards healthy beverages. Against this backdrop, premium beverage stocks Coca-Cola (KO) and Ambev (ABEV) may have growth opportunities in the near future. Read on….

Despite heightened concerns and market volatility, the beverage industry is poised to remain well positioned thanks to continued demand. Additionally, consumers opting for healthy beverages are expected to keep the industry buoyant amid rising health awareness. Against this backdrop, let's explore the upside potential of beverage stocks The Coca-Cola Company (KO) and Ambev S.A. (ABEV).

The beverage industry is expected to show resilience due to continued demand for its product despite rising prices. Global Beverages Market is projected to expand at a CAGR of 13.8% between 2022-2028, to reach USD 518.48 Billion by 2028.

As taste remains a major driving force, consumer choices are changing rapidly and showing a propensity to consume healthy beverages. Also, the demand for non-alcoholic beers is expected to increase.

According to Statista, the soft drinks market revenue is $1.45 trillion in 2023 and is projected to grow at a CAGR of 4.6% from 2023 to 2027. In 2023, soft drinks are the largest segment of the market, with revenue of $0.85. billion in market volume.

In this environment, fundamentally strong beverage stocks KO and ABEV could be solid buys to generate meaningful returns in the near future.

The Coca-Cola Company (KO)

KO is a beverage company that operates across segments including Europe, Middle East and Africa; Latin America; North America; Asia Pacific; global companies; and bottling investments. It owns and markets five brands of sparkling soft drinks, and its products are sold in more than 200 countries.

On February 16, 2023, KO's Board of Directors announced its 61st consecutive annual dividend increase, increasing the quarterly dividend by approximately 4.6% from $0.44 to $0.46 per share ordinary, payable to shareholders on April 3, 2023. The company paid dividends totaling $7.60 billion in 2022.

KO's annual dividend of $1.84 per share translates to a yield of 3.09% on current prices. Its dividends have grown at CAGRs of 3.2% and 3.5% over the past three and five years, respectively. Its four-year average dividend yield is 3.05%.

James Quincey, Chairman and CEO of KO, said, "As we enter 2023, we continue to invest in our capabilities and strengthen alignment with our bottling partners to maintain flexibility."< /p>

KO's trailing 12-month EBIT margin of 28.49% is 273.1% higher than the industry average of 7.64%. In addition, its 12-month net profit margin and leveraged FCF margin of 22.19% and 18.17% are 589.6% and 619.2% higher than the industry averages of 3.22% and 2.53%, respectively.

For the fiscal fourth quarter ended December 31, 2022, KO's non-GAAP net operating income was $10.20 billion, up 7.7% year-over-year 'other. Its non-GAAP gross profit rose 6% year-on-year to $5.76 billion. In addition, its non-GAAP net income and non-GAAP net income per share were $1.94 billion and $0.45, respectively.

For the first fiscal quarter ending March 2023, analysts expect KO's EPS to increase slightly year-over-year to $0.65. Street expects revenue to grow 2.9% year over year to $10.81 billion for the same quarter. KO has exceeded consensus estimates for EPS and revenue in the past four quarters.

KO shares lost 1.1% intraday to close the latest trading session at $58.86.

KO's strong fundamentals are reflected in its POWR ratings. The stock's overall B rating indicates Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.

KO has a B for Stability, Feel, and Quality. In the B-rated beverage industry, it is ranked 17th out of 37 stocks.

Click here for additional POWR ratings for Growth, Value, and Momentum for KO.

Ambev S.A. (