Better Buffett Stock: Constellation Brands vs. Coca-Cola

Core Insights - Warren Buffett plans to step down as CEO of Berkshire Hathaway but continues to make significant trades in the company's $285 billion portfolio, indicating a cautious market outlook [1] - Constellation Brands has seen a 23% decline in stock price over the past year, while Coca-Cola's shares have risen by 15%, raising questions about investment choices [4] - Constellation's investment by Buffett, totaling 12 million shares worth $2.3 billion, represents 0.8% of Berkshire's portfolio, despite facing significant challenges [4][5] Constellation Brands - Constellation Brands produces over 100 brands of alcoholic beverages, including Modelo, Corona, and Pacifico, which are affected by a 25% tariff imposed by the Trump administration [5] - The company is experiencing a decline in its cheaper wine brands and lower alcohol consumption rates among younger consumers, prompting a strategy to divest weaker brands and introduce lighter and nonalcoholic drinks [6][7] - Analysts project revenue to decrease from $10.2 billion to $9.9 billion from fiscal 2025 to fiscal 2028, with a net loss reported in fiscal 2025 due to goodwill impairment charges [8] - Expected EPS growth is projected at a compound annual growth rate (CAGR) of 7% over the next two years, with the stock trading at 15 times earnings and a forward yield of 2.1% [9] Coca-Cola - Coca-Cola is a long-term investment for Buffett, with 400 million shares valued at $28.8 billion, making it 10.1% of Berkshire's portfolio [10] - The company has diversified its product offerings beyond sugary sodas, including bottled water, juices, teas, and alcoholic beverages, to mitigate risks from declining soda consumption [11] - Coca-Cola's business model is less exposed to tariffs, as it sells concentrates and syrups, while finished products are produced by independent bottlers [12] - Analysts forecast a CAGR of 4% for revenue and 11% for EPS from 2024 to 2027, with the stock valued at 25 times forward earnings and a forward yield of 2.8% [14] Investment Recommendation - Coca-Cola is viewed as a more stable investment compared to Constellation Brands, which faces more significant challenges [15]