Buy 3 Wide Moat Stocks With Double-Digit Near-Term Upside Potential

The wide moat strategy involves investing in companies that not only lead their industries but are also strategically fortified to maintain dominance in the future. The business models of these companies possess durable competitive advantages that shield them from competitors. This strategy isn't just about short-term gains, but securing a portfolio of stocks that can weather economic storms and continue to deliver stable and predictable returns.

This investment strategy focuses on companies with unique strengths such as brand recognition, patent protection, proprietary technology, and network effects. These moats ensure long-term profitability and market leadership, making the companies resilient in volatile markets.

Here we recommend three Wide Moat stocks with a favorable Zacks Rank. These stocks have solid short-term price upside potential. The stocks are Pfizer Inc. PFE, The Coca-Cola Co. KO and The Walt Disney Co. DIS. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows the price performance of our five picks in the past three months. 

Pfizer Inc.

Pfizer is one of the largest and most successful drugmakers in the field of oncology. Its position in oncology was strengthened with the addition of Seagen. This drug generated sales of $3.4 billion in 2024, up 38% on a pro forma basis. 

PFE has committed significant resources toward the development of treatments in the fields of oncology, internal medicine, immunology and inflammation and vaccines. In 2024, PFE gained approval for some interesting new products like two gene therapies for hemophilia, Hympavzi (marstacimab) and Beqvez/Durveqtix (fidanacogene elaparvovec).

PFE expects cost cuts and internal restructuring to deliver savings of $7.7 billion by the end of 2027. Continued growth in non-COVID sales and significant cost-reduction measures should drive profit growth.

Lucrative Short-Term Price Upside Potential for PFE Stock

Pfizer has an expected revenue and earnings growth rate of 0.6% and 1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% in the last 30 days.

Pfizer presently carries a forward P/E of 7.41X for the current-year, compared with 12.96X for the industry and 19.20X for the S&P 500. PFE currently carries a forward P/S of 2.08X for the current-year, compared with 3.15X for the industry and 2.99X for the S&P 500. It also carries a forward P/B of 1.43X for the current-year, compared with 4.66X for the industry and 3.52X for the S&P 500.

The short-term average price target of brokerage firms for the stock represents an increase of 23.7% from the last closing price of $23. The brokerage target price is currently in the range of $23-$33. This indicates a maximum upside of 43.5% and no downside.

The Coca-Cola Co

The Coca-Cola experiences positive business trends, as evidenced by its strong track record of beating expectations. KO has benefited from continued business momentum, aided by higher pricing across markets facing intense inflation and a favorable mix. 

Coca-Cola's all-weather strategy, combining marketing, innovation, and revenue growth management, supports its vision of a total beverage company and is expected to drive revenue growth in 2025. KO has provided an optimistic view for 2025.

Impressive Short-Term Price Upside Potential for KO Shares

Coca-Cola has an expected revenue and earnings growth rate of 2.4% and 2.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has remained the same in the last 60 days. KO has a return on equity (ROE) of 45.5% compared with 14.1% for the industry and 16.92% for the S&P 500.

The short-term average price target of brokerage firms for the stock represents an increase of 11.1% from the last closing price of $71.93. The brokerage target price is currently in the range of $70-$86. This indicates a maximum upside of 19.6% and a downside of 2.7%.

The Walt Disney Co.

The Walt Disney reported steady second-quarter fiscal 2025 results wherein revenues and earnings increased year-over-year. Domestic Parks & Experiences saw growth at domestic parks, Disney Vacation Club and Disney Cruise Line, partially offset by the decline at international locations including Shanghai Disney Resort and Hong Kong Disneyland Resort.  

In Entertainment, DIS expects double-digit percentage segment operating income growth in fiscal 2025. ESPN continues to reinforce its position as sports' dominant platform, with the second quarter delivering its most-watched primetime ever and 32% viewership growth in the key 18-49 demographic.

DIS has successfully transformed its streaming business from a loss-leader to a profitable growth engine. After reporting its first-ever Direct-to-Consumer (DTC) operating profit in FY2024, the momentum has accelerated in FY2025 with second-quarter DTC operating income reaching $336 million.

Attractive Short-Term Price Upside Potential for DIS Stock

The Walt Disney has an expected revenue and earnings growth rate of 3.8% and 15.1%, respectively, for the current year (ending September 2025). The Zacks Consensus Estimate for current-year earnings has improved 4.6% in the last 30 days. At present, DIS carries a forward P/E of 19.83X for the current year, compared with 20.37X for the industry and 19.20X for the S&P 500.

The short-term average price target of brokerage firms for the stock represents an increase of 10.9% from the last closing price of $112.66. The brokerage target price is currently in the range of $100-$148. This indicates a maximum upside of 31.4% and a downside of 11.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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