Investors who have owned stocks in the past year have generally experienced some decent gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return over the past 12 months is 17%. But there is no question some big-name stocks performed better than others along the way.
Coca-Cola’s Big Year: One company that has been a strong investment in the past year has been beverage giant Coca-Cola Co (NYSE:KO).
In recent years, Coca-Cola has been investing in expanding outside its core soda business into higher-growth areas such as water, plant-based beverages, coffees, teas and other drinks. Unfortunately, restaurant, bar and stadium closings in 2020 hit the company’s away-from-home sales hard, creating a difficult environment for Coca-Cola.
One silver lining for Coca-Cola investors is the stock’s 2.7% dividend, which is more than double the overall yield of the S&P 500. Coca-Cola generated $8.7 billion in free cash flow in 2020, which was more than enough to cover its $7 billion in dividends. In fact, even after an extremely difficult pandemic year, Coca-Cola raised its dividend once again in February 2021, marking its 59th consecutive year of dividend hikes.
At the beginning of 2020, Coca-Cola shares were trading at $55.32. By the beginning of March, the stock had dropped to $53.93 after news of the virus spreading in China prompted concerns about a U.S. pandemic. On March 23, Coca-Cola stock ultimately bottomed at $36.27. Fortunately, the stock rebounded somewhat from that point on as the broader market recovered.
By early September, Coca-Cola shares were back above $50. But while the S&P 500 has continued to rise since that time Coca-Cola has mostly stalled out.
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Coca-Cola In 2022, Beyond: By early January 2021, Coca-Cola shares had grinded as high as $54.93, but the stock took a big hit when RBC Capital downgraded the stock to Sector Perform and said its “valuation is near-full.” In the note, the analyst said the negative impact of COVID-19 could last longer than many investors assume.
After dipping as low as $48.11 in January following the downgrade, Coca-Cola has spent the past year marching steadily higher. In the past three quarters, Coca-Cola reported sales numbers that surpassed pre-pandemic numbers in 2019.
In November 2021, Coca-Cola announced a $5.6 billion buyout of sports drink company BodyArmor, its largest brand acquisition in history.
The stock recently finally surpassed its pre-pandemic all-time high, surging above $62 ahead of its fourth-quarter earnings report.
Coca-Cola investors who bought one year ago and held on have generated an impressive return on their investment. In fact, $1,000 in Coca-Cola stock bought on Feb. 9, 2021, would be worth about $1,282 today, assuming reinvested dividends.
Looking ahead, analysts are expecting Coca-Cola's stock to continue grinding higher in the next 12 months. The average price target among the 23 analysts covering the stock is $64, suggesting 3.2% upside from current levels.
