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The beverage industry offers investors plenty of options to quench their thirst for portfolio profits. Constellation Brands (NYSE: STZ) commands a dominant position in the U.S. beer market, while Coca-Cola (NYSE: KO) is recognized for its iconic global soft drink empire.
Despite a long history of both companies rewarding shareholders, the two stocks have diverged sharply in performance at the start of 2025. At the time of this writing, Coca-Cola stock has returned 15% year to date, while shares of Constellation Brands are down 16% over the same period.
Should investors stick with the pop in Coca-Cola for further gains, or can the stars align for Constellation Brands to turn things around? Let's discuss which stock is the best buy right now.
The case for Constellation Brands
Concerns over the strength of the U.S. economy and uncertainties surrounding trade tariffs being implemented by the Trump administration have weighed on stock market sentiment thus far in 2025.
Constellation Brands has been caught up in this recent turbulence, facing a 20% tariff on imports from Mexico, where nearly all its beer, including the flagship Corona and Modelo brands, is bottled and brewed.
Though full details have not yet been disclosed, Constellation faces higher costs per unit that could hit earnings. The company is attempting to mitigate the fallout through a series of strategic responses, including cost cuts, stockpiling inventory, and exploring modest price hikes to support profitability.
The attraction of Constellation Brands as an investment is that the company remains at the top, with Modelo as the No. 1 selling beer brand in the U.S., capturing a loyal customer following. Even through the disruption, Wall Street analysts project 2% revenue growth this year alongside a solid 12% increase in earnings per share (EPS) to an estimate of $13.46, reflecting the underlying demand and sales momentum.
The silver lining to the stock's deep sell-off in recent months is that its valuation looks compelling. Shares of Constellation Brands are trading at just 13 times its consensus 2025 EPS as a forward price-to-earnings (P/E) ratio, a relative bargain next to Coca-Cola at an earnings multiple closer to 24.
While the uncertainty represents a near-term headwind, fundamentals remain solid, and there is hope that the tariffs are temporary. Investors who believe Constellation Brands will emerge stronger have ample reason to buy and hold the stock.
The case for Coca-Cola
Coca-Cola has largely sidestepped tariff-related pressures by utilizing its strong global supply chain. Its increasingly diverse product portfolio, spanning more than 200 brands including sports drinks, flavored waters, juices, and dairy beverages, reaches far beyond its traditional focus on sodas. It's not a coincidence that shares of Coca-Cola are trading at an all-time high, with several indicators suggesting the company's outlook is as strong as ever.