Daily Stock Pick for June 7, 2023

Yesterday, I revealed the name of one of my favorite recession-resistant stocks right here on this newsletter.

Today I’m sharing another one. This stock has all the hallmarks of a recession-resistant stock such as:

  • Low-cost products that everybody can afford even in an economic downturn
  • Unparalleled branding power
  • A “dividend king” that has a track record of consistently raising its dividend over the years
  • Steadily growing revenues despite challenging economic circumstances

This company also just streamlined its operations to focus on its core offerings – those with the strongest branding power. It now seems even more prepared to deal with any challenging operating environment.

If the “most predicted recession in the world” finally hits, this is one stock I would want to have in my portfolio.

The Coca-Cola Company (KO)

As I said, this company has unparalleled branding power. In fact, a recent poll determined that Coca-Cola comes in third place for the most recognized brand in  the world, just behind Apple and McDonald’s.

Its earnings track record has been super solid, although there was a slight dip in profit margins last year as the company grappled with high inflation. However, this is where the company’s decision to streamline its beverage offerings at the start of the pandemic bore fruit – had it not done so, last year’s operational performance might have been significantly worse.

Margins aside, the actual numbers themselves have continued to show an increase. Coca-Cola’s operating income of $10.9 billion last year was another record. And although its recent quarter saw a tiny dip in operating income compared to a year ago, the underlying business metrics remain solid.

Sure, the supermarket brand alternatives on the store might be a bit cheaper. But these are low-ticket items, and the price difference is slight. Consumers will gladly pay that little bit extra to buy a trusted brand – and this has been reflected in Coca-Cola’s numbers time and time again. This is likely to endure even if a recession hits.

Finally, on the dividend front, Coca-Cola is what is known as a “dividend king”. The company has consistently raised its dividends for over 60 years, solidifying its own “brand name” to investors.

Whether a recession hits or not, Coca-Cola is one stock I would always like in my portfolio.

To your wealth,
Felix @ Ace of Investing