3 Beverage Stocks Quenching Consumer Thirst

The beverage industry is undergoing a significant transformation, driven by a surge in demand for healthier choices, sustainability, and innovative delivery models. Key beverage players PepsiCo, Inc. (PEP), Coca-Cola Consolidated, Inc. (COKE), and National Beverage Corp. (FIZZ) are strategically positioned to capitalize on this evolving landscape, making them compelling picks for investors seeking to tap into the sector’s growth.

The beverage industry is experiencing transformative growth, driven by evolving consumer preferences, technological advancements, and an increasing focus on sustainability. Trends like direct-to-consumer channels, enhanced marketing through technology, and innovative product formats such as subscription services are reshaping the market.

Growth in the beverage industry is also fueled by a rising preference for healthier drink options, higher disposable incomes, and strong demand for bottled water. Innovations like zero-sugar and health-centric beverages are unlocking new opportunities, particularly in the Asia Pacific, where urbanization and changing consumer lifestyles drive market expansion.

The global beverage market is projected to grow at a CAGR of 2.5%, reaching $1.86 trillion by 2026, showcasing significant opportunities for growth and innovation in the sector.

Considering these positive developments, let's delve deeper into Beverages stocks:

Stock #3: National Beverage Corp. (FIZZ)

FIZZ develops, markets, and sells beverages, including sparkling waters, juices, energy drinks, and soft drinks under brands like LaCroix, Shasta, and Faygo. It serves retailers and smaller accounts across take-home, convenience, and food-service channels in the U.S. and Canada.

FIZZ’s net sales were $291.20 million in the fiscal second quarter that ended on October 26, 2024. Operating income grew 7% to $58 million. Its net income came in at $45.64 million, up 4.2% year-over-year, while its earnings per common share grew 4.3% from the year-ago value to $0.49.

Street expects FIZZ’s revenue for the fiscal third quarter (ending January 31, 2025) to increase 4.5% year-over-year to $282.22 million. Its EPS for the same quarter is expected to grow 6.9% from the prior year to $0.45.

The stock has plunged 3.5% in the past month to close the last trading session at $48.27.

FIZZ’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has an A grade in Quality and a B for Stability. Within the Beverages industry, it is ranked #16 out of 32 stocks.

Click here to see FIZZ’s ratings for Growth, Value, Momentum, and Sentiment.

Stock #2: Coca-Cola Consolidated, Inc. (COKE)

COKE manufactures and distributes a wide range of nonalcoholic beverages, including sparkling drinks, energy drinks, water, coffee, tea, and juices. It serves diverse end-users, such as retailers, restaurants, schools, and recreational facilities, ensuring broad market accessibility.

It pays an annual dividend of $26, which translates to a dividend yield of 2.01% at the prevailing price levels, well above its four-year average dividend yield of 0.66%. Additionally, the company’s dividend payouts have grown at a compound annual growth rate of 58.7% over the past three years.

COKE’s net sales increased 3.1% year-over-year to $1.77 billion in the fiscal third quarter that ended on October 30, 2024. Its adjusted income from operations came in at $226.26 million, up 5% from the year-ago value. Its adjusted net income stood at $166.68 million, representing an increase of 1.6% over the prior-year quarter. Its net income per share grew 34.5% from the year-ago value to $13.18.

Shares of COKE have gained 54.8% over the past year and 37.6% year-to-date to close the last trading session at $1,277.04.

COKE’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has a B grade for Stability, Sentiment, and Quality. It is ranked #10 in the same industry.

To access COKE’s Growth, Value, and Momentum ratings, click here.

Stock #1: PepsiCo, Inc. (PEP)

PEP is a global leader in the production, marketing, and distribution of beverages and convenient foods. With renowned brands like Lay's, Pepsi, Gatorade, and Quaker, it caters to a broad consumer base through grocery stores, e-commerce platforms, and food service channels across diverse regions worldwide.

On November 22, PEP announced its agreement to acquire the remaining 50% stakes in Sabra Dipping Company and Obela, becoming the sole owner of these companies. These acquisitions enhance PEP's portfolio and solidify its market leadership by expanding its array of innovative products.

On November 19, PEP declared a quarterly dividend of $1.355 per share, reflecting a 7% year-over-year increase. This amount is payable to the shareholders on January 6, 2025. It pays an annual dividend of $5.42, which translates to a dividend yield of 3.43% at the prevailing price levels.

In the fiscal third quarter ended September 7, 2024, PEP’s net revenues were $23.32 billion. Its core operating profit was $4.18 billion, up 3.6% from the year-ago value. Moreover, core net income attributable to PepsiCo stood at $3.19 billion and $2.31 per share, respectively, representing increases of 2.6% and 2.7% over the prior-year quarter.

Street expects PEP’s revenue and EPS for the fourth quarter ending December 31, 2024, to increase marginally and 9.4% year-over-year to $27.98 billion and $1.95, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has declined 5% to close the last trading session at $159.47.

PEP’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has an A grade for Quality and a B for Growth. It is ranked #9 in the same industry.

To access PEP’s Value, Momentum, Stability, and Sentiment ratings, click here.

What To Do Next?

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PEP shares fell $0.09 (-0.06%) in premarket trading Tuesday. Year-to-date, PEP has declined -3.10%, versus a 28.42% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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