KO, PM, or KDP: Which “Strong Buy” Consumer Defensive Stock Could Generate the Most Attractive Returns?

Many investors often prefer adding consumer defensive stocks to their portfolios during difficult macroeconomic conditions. Consumer defensive stocks are stocks of companies that make or distribute essential goods and services, including food, beverages, household products, and tobacco. These companies are generally less sensitive to economic cycles, as consumers tend to purchase their goods even during economic downturns. Using TipRanks’ Stock Comparison Tool, we placed Coca-Cola (KO), Philip Morris International (PM), and Keurig Dr Pepper (KDP) against each other to pick the consumer defensive stock that can deliver the highest returns.

Coca-Cola (NYSE:KO)

On Tuesday, beverage giant Coca-Cola reported better-than-anticipated first-quarter results, with organic revenue growing 6% due to higher prices. Moreover, unit case volume increased 2%, driven by growth in India, China, and Brazil. The company highlighted that despite some pressure in key developed markets, the strength of its global footprint helped it “successfully navigate a complex external environment.”

Unlike rival PepsiCo (PEP), Coca-Cola didn’t lower its full-year guidance, saying that it expects the impact of global trade wars to be “manageable.” The company continues to expect organic revenue growth in the range of 5% to 6% and comparable EPS growth of 2% to 3% compared to $2.88 in 2024.

What Is the Target Price for KO Stock?

In reaction to the solid Q1 2025 results, Morgan Stanley analyst Dara Mohsenian reiterated a Buy rating on Coca-Cola stock with a price target of $78. Mohsenian noted that while the bar was high for KO, Q1 upside and unchanged full-year outlook establish the company’s strong positioning against rivals. The 5-star analyst stated that KO stock is his firm’s top stock idea and highlighted positives like solid pricing power, strong volume growth despite geopolitical headwinds, and growing Fairlife contribution.

With 17 Buys against one Hold recommendation, Wall Street has a Strong Buy consensus rating on Coca-Cola stock. The average KO stock price target of $77.25 implies 6.8% upside potential. More analysts could revise their price targets in reaction to KO’s Q1 results. KO stock has advanced 16.2% so far this year. Coca-Cola stock offers a dividend yield of 2.7%.

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Philip Morris International (NYSE:PM)

Philip Morris International makes cigarettes and smoke-free products, including heated tobacco, e-vapor, and oral smokeless products. The company aims to generate more than two-thirds of its net revenue from smoke-free products by 2030. As of March 31, 2025, smoke-free products accounted for 42% of PM’s net revenue.

PM stock has rallied 41.5% year-to-date, thanks to the Marlboro maker’s solid financials and strong growth potential. The company recently delivered better-than-expected first-quarter results and raised its full-year earnings outlook. Philip Morris gained from the demand for its newer offerings, like nicotine pouch ZYN, and a rise in cigarette prices.

Notably, ZYN’s U.S. shipment volume surged 53% in Q1 2025, as consumers are seeking smoking alternatives. Q1 results also benefited from persistent strength in the heated tobacco device IQOS, the company’s flagship alternative product. Overall, Philip Morris is upbeat about the growth ahead and stated that despite an uncertain and volatile global economic backdrop, it now expects double-digit adjusted EPS growth in dollar terms for 2025.

Is PM Stock a Buy or Sell?

Following the stellar results, Lisa Lewandowski increased the price target for Philip Morris stock to $182 from $175 and reiterated a Buy rating. The analyst noted that PM’s Q1 organic net sales, gross profit, and operating income growth were fueled by a 20.4% rise in smoke-free sales and a 33.1% jump in smoke-free gross profit.

The 5-star analyst boosted her 2025 to 2027 EPS estimates by $0.27 each to $7.48, $8.25, and $9.04, respectively, to reflect modest model adjustments, updated foreign exchange expectations, and modestly higher ZYN volume outlook.

Overall, Philip Morris stock scores a Strong Buy consensus rating based on eight Buys and one Hold recommendation. The average PM stock price target of $180.63 implies 6.1% upside potential from current levels. Philip Morris stock offers a dividend yield of 3.14%.

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Keurig Dr Pepper (NASDAQ:KDP)

Keurig Dr Pepper has a portfolio of over 125 owned, licensed, and partner brands across beverage categories like carbonated soft drinks, coffee, tea, water, juice, and mixers. It claims to have the #1 single-serve coffee brewing system in the U.S. and Canada.

With more than 6% growth in adjusted net sales and a 10% increase in comparable EPS for Q1 2025, KDP surpassed Wall Street’s expectations. The strength in the company’s U.S. Refreshment Beverages business helped offset the continued softness in the coffee business. Additionally, the company reaffirmed its full-year guidance of a mid-single-digit increase in constant currency net sales and high-single-digit adjusted EPS growth.

Is KDP a Good Stock to Buy?

Last week, HSBC analyst Sorabh Daga upgraded Keurig Dr Pepper stock to Buy from Hold and increased his price target to $42 from $36, citing strong Q1 2025 results in the soft drinks business that supported its full-year outlook despite a weak consumer environment and tariff woes. Within the soft drinks business, Daga noted that KDP witnessed market share gains for core brands, including Dr Pepper, Dr Pepper Zero Sugar, and Canada Dry.

Further, energy brands, GHOST and C4, also delivered strong performance. The analyst sees an opportunity for KDP to capture market share in regions where it competes with PepsiCo. Further, Daga noted that in coffee, KDP hiked prices ahead of peers, which helped protect the single-serve category. While KDP’s U.S. coffee sales declined by 3.7% in Q1 2025, Daga expects traditional price gaps to normalize by the second half.

Overall, Keurig Dr Pepper stock scores a Strong Buy consensus rating based on 12 Buys and four Holds. The average KDP stock price target of $39.07 implies 14.1% upside potential from current levels. KDP stock has risen 7% year-to-date. KDP’s dividend yield stands at 2.63%.

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Conclusion

Wall Street is bullish on all three consumer defensive stocks discussed above. Analysts currently see higher upside potential in Keurig Dr Pepper stock than in the other two consumer defensive stocks. Keurig Dr Pepper is witnessing strong growth in its U.S. Refreshment Beverages business. It is well-positioned to capture additional market share in key growth areas.