With both the Dow Jones Industrial Average (up 8.8% so far this year) and the S&P 500 (SPY) (up almost 13%) poised to end the year near all-time highs, investors -- thinking a pullback is always around the corner -- have begun to look for safety. And beverage stocks have established a reputation as good defensive investments.
As a group, beverages have done well in 2014, posting an aggregate gain of 15%, according to Fidelity, and helping the PowerShares Dynamic Food & Beverage Portfolio (PBJ) to surge nearly 18% for the year.
Can these stocks stay bubbly in 2015? Yes, they can. But the gains won't come from the stock that may be most familiar to readers. Take a look at the chart below, courtesy of YCharts.
KO data by YCharts
PepsiCo (PEP) shares have risen 17% in 2014, vs. Coca-Cola's (KO) year-to-date gain of only about 4.0%. PepsiCo shareholders can smile and don't have to care who won the taste test. The investment is all that matters, and PepsiCo is going to be a force to be reckoned with in 2015 and beyond.Coke seems to have run out of innovative ideas of its own. In an effort to quench Wall Street's thirst for growth, Coke has been taking stakes in other beverage companies to help offset its own weak sales. Its recent 17% stake in Monster Beverage ( MNST) for nearly $2.2 billion is the latest example. This comes after Coca-Cola scooped up a 16% stake in Keurig Green Mountain ( GMCR) back in May.
Coke's investments have surged. Keurig Green Mountain shares have soared more than 82% this year, while Monster stock has added more than 66%.