Special things can happen when sleepy stocks start to wake up. Looking back the past few years, there may not seem to be a lot that's interesting when it comes to Coca-Cola(NYSE: KO), Disney(NYSE: DIS), and Verizon(NYSE: VZ). They're all names that most investors and consumers know, but they have a long history of slow growth.
The three stocks make up 10% of the names in the Dow Jones Industrial Average(DJINDICES: ^DJI). The iconic market gauge isn't typically a hotbed of big gainers, but I think Coca-Cola, Disney, and Verizon can beat the market for the balance of this year and beyond. Let's take a closer look.
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1. Coca-Cola
The story for the pop star isn't as sparkling as its namesake offering at first glance. Consumers have been cutting back on sugary beverages. Revenue has declined in more than half of the past dozen years. With the shares trading for 24 times forward earnings, it might not seem cheap given its sluggish fiscal performance.
Thankfully, there's a lot of fizz in the flatness. Coca-Cola is resonating with investors in the current climate. It's the biggest gainer among all 30 of the Dow stocks this year, the only one posting a double-digit rise in a challenging 2025 backdrop for investors. Despite being a global juggernaut, it's not as tariff-susceptible as most consumer-facing businesses. Most Coca-Cola beverages are bottled and distributed locally. It's also relatively recession-proof given the low price for refreshing escapism.
The story gets better if you zoom in a bit, a tall order for a company that's been around for 135 years. I pointed out that revenue has declined in seven of the past 12 years, but it has actually risen in the past four years. Two of those four years treated investors to rare double-digit top-line jumps.
The beverage stock reports its first-quarter results on Tuesday morning. The bulls have momentum. Coca-Cola has a knack for exceeding expectations. It has posted modest single-digit percentage beats through 2024. Can it keep the positive surprises going into 2025 and beyond?
Period
EPS Estimate
Actual EPS
Surprise
Q1 2024
$0.70
$0.72
3%
Q2 2024
$0.81
$0.84
4%
Q3 2024
$0.75
$0.77
3%
Q4 2024
$0.52
$0.55
6%
Data source: Yahoo! Finance. EPS = earnings per share (adjusted).
Now let's zoom out again. Despite the U.S. trend away from colas and even diet sodas, Coca-Cola has built up a portfolio of about 200 brands covering carbonated sodas, hydration, coffee, tea, juice, dairy, and, more recently, alcoholic offerings through low-risk partnerships. It boosted its dividend two months ago, something it has now done for a confidence-inspiring 63 consecutive years. Despite more than six decades of annual increases, its payout ratio remains under 70%. In short, the quarterly distributions should continue to move higher.
The business works. Its flagship soft drink business remains a lucrative money machine, selling its syrupy concentrate to a global network of largely independent distributors. Net margin has been 22% or better for six straight years. You may want to wait until its quarterly update this week to make sure that its outlook remains effervescent, but Coca-Cola is winning this year because it's positioned well for whatever is coming around the corner.
Image source: Getty Images.
2. Disney
At the other end of the consumer spectrum, Disney isn't faring as well as the king of pop. The House of Mouse is among the 60% of Dow 30 stocks trading lower in 2025. Its realm of global premium-priced theme parks are naturally not sheltered from the current trade war or recessionary whispers.
However, there's still a lot to like when it comes to Disney. Content still matters, and Disney's studio remains the ultimate tastemaker. It had all three of the world's highest-grossing theatrical releases this year, and it has a strong slate of films coming out in the final eight months of 2025. With its popular Disney+ streaming platform turning profitable, the media giant is likely to see strong earnings growth that will outpace its modest revenue moves.
Analysts see revenue inching just 3% higher in the fiscal year that ends in five months, accelerating to a 5% increase in fiscal 2026. Those same pros see earnings per share rising 10% and 11%, respectively, in those fiscal periods. Disney stock is lagging the market for the fourth time in the past five years, but that makes the valuation even more compelling. The shares are trading for less than 15 times next year's earnings estimates, a historical bargain for a company that has earned its right to a market premium given decades of industry-leading content creation.
3. Verizon
Let's bring this home with Verizon. The wireless carrier is the highest yielding Dow stock with its juicy 6.5% yield. Growth for the telcos has been uninspiring. Verizon hasn't been able to top 6% growth in each of the past 15 years, and that includes slight dips in back-to-back years. Wall Street pros see revenue growth clocking in just shy of 2% in each of the next two years.
Reality hasn't lived up to the hype for Verizon and its peers. Major investments in 5G technology and other infrastructure updates haven't resulted in next-level growth. The upside is that folks aren't going to get rid of their wireless service anytime soon. Tariffs may make new smartphones more expensive, but providing connectivity is the moneymaker here. Despite the admittedly substantial debt, Verizon is still trading for less than nine times forward earnings. In other words, its streak of 18 years of dividend increases is likely to continue. It's a smart call.
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Rick Munarriz has positions in Verizon Communications and Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
