Coca-Cola Has Historically Been a Warren Buffett Favorite Stock. But Is This Georgia-Based Company a Buy in Today's Market?

In 1996, my family traveled to Atlanta, GA and a younger version of me got to visit the World Of Coca-Cola from The Coca-Cola Company (NYSE: KO). I was mesmerized and I've been a big fan of the nostalgic branding ever since. Of course, the company has millions of fans besides me, including one prominent resident of Omaha.

In 1988, Warren Buffett's company Berkshire Hathaway began investing in Coca-Cola stock. By 1989, Buffett had invested more than $1 billion of Berkshire's money into the beverage giant from Georgia, good for more than 6% of the overall company at the time.

Buffett's investment in this stock from The Peach State has been just peachy. Thanks to holding for the long term and reinvesting dividends, Berkshire now holds 400 million shares of Coca-Cola, worth more than $28 billion. Moreover, Berkshire also owns more than 9% of the company now thanks to Coca-Cola's stock buybacks.

The Coca-Cola Company reported financial results for its fiscal third quarter of 2025 on Oct. 21, giving investors a timely reason to revisit this stock and ask if it's still a buy in today's market.

Spoiler alert: Despite my love of the brand, I don't believe Coca-Cola stock is a good buy for many investors today. But Buffett's thought process 40 years ago can guide investors toward a better idea right now.

Why Coca-Cola isn't the best stock right now

For investors trying to outperform the S&P 500, Coca-Cola stock has been a poor choice lately. It's underperformed the market over the last three-, five-, 10-, and 20-year periods, even when factoring in reinvested dividends.

It's not hard to explain why Coca-Cola stock has underperformed the S&P 500: The company has averaged just 5% year-over-year quarterly growth over the last 20 years. That's usually not enough to propel a business to market-beating gains.

KO Revenue (Quarterly YoY Growth) data by YCharts

Don't misunderstand: Coca-Cola stock still has its virtues. For starters, it's impressive that revenue continues to rise even after 130 years in business -- Q3 net revenues were up 5% from the fiscal third quarter of 2024. I attribute this ongoing growth to Coca-Cola's huge portfolio of beverages. In short, beverages don't go out of style and the company can constantly pivot into consumer trends.

Moreover, Coca-Cola is an accomplished dividend stock, having paid and raised the dividend for more than 60 years, ranking it among the Dividend Kings. With a 2.8% dividend yield as of this writing, the dividend has been more attractive with a higher yield at times. But investors who buy for the dividend today still get a good payout and should enjoy payments for years to come.

All of this being said, many investors want better returns than what Coca-Cola stock has offered in recent years. And that's why I think that investors can use Warren Buffett's thought process to find a better beverage stock today.

Here's what Buffett saw in Coca-Cola 40 years ago

In his 1989 letter to Berkshire Hathaway's shareholders, Warren Buffett wrote about Coca-Cola "drifting" for a short period of time. He then wrote, "What was already the world's most ubiquitous product gained new momentum, with sales overseas virtually exploding." In other words, Coca-Cola had its second phase of growth in international markets after saturating the U.S. market.

It's not nearly as ubiquitous as Coca-Cola was in 1989. But Celsius Holdings (NASDAQ: CELH) is nevertheless on the cusp of its second act as well thanks to international markets.

To be clear, energy drink company Celsius is somewhat drifting in North America. In 2023, the company had nearly $1.3 billion in revenue in North America. As of the second quarter of 2025, it has trailing-12-month revenue of almost $1.6 billion. That's not much growth and it's even more modest when considering that Celsius acquired Alani Nu during this time.

However, Celsius could potentially surpass $100 million in international revenue in 2025, up from around $75 million in 2024. That's a much stronger growth rate and one would only expect for momentum to build in coming years. After all, the company just entered many of its new markets within the past year.

In spite of stiff competition from the beverage giants and direct competitor Monster, Celsius has been able to grow across North America. Now Celsius is looking for a new phase of growth overseas as Coca-Cola did decades ago. And this could fuel the stock to much greater upside than Coca-Cola stock over the next five years.

Could Celsius lose market share in North America? Yes, it's possible. Could Celsius fail to gain traction in international markets? Of course, that could happen as well. But just as Warren Buffett saw potential in Coca-Cola stock as it set its sights to international markets, I see the same potential with Celsius and it's why it's a stock that I continue to hold today.

Jon Quast has positions in Celsius. The Motley Fool has positions in and recommends Berkshire Hathaway, Celsius, and Monster Beverage. The Motley Fool has a disclosure policy.