Coca-Cola Stock Dips—Is CELH the Growth Your Portfolio Needs?

Key Points

• Coca-Cola reported a rare negative free cash flow in Q2 2025 due to its acquisition of Fairlife, underscoring the company’s limited organic growth.
• Celsius is delivering organic, high-margin growth with major earnings beats and rising analyst price targets.
• Investors can choose between Coca-Cola’s income and stability, or Celsius’ growth and upside potential.

For the first time in decades, Coca-Cola Co. NYSE: KO reported negative free cash flow (operating cash flow minus capital expenditures), with a net outflow of $1.4 billion. While this headline may alarm some investors, the underlying cause wasn’t a collapse in sales or brand strength; it was a strategic acquisition.

Despite this being a common move among large-cap companies to facilitate growth, KO stock has declined by over 6.4% since its Q2 earnings report was released in July 2025. For investors focused on capital appreciation, it may be time to look beyond legacy names.

As Coca-Cola leans on acquisitions to stay relevant, Celsius Holdings Inc. NASDAQ: CELH is delivering organic growth, breakout earnings, and increasing analyst confidence—all without sacrificing momentum. The contrast between these two companies reflects a broader choice investors face today: stability or growth—or a smart balance of both.

Why Coca-Cola’s Free Cash Flow Miss Isn’t a Crisis

Excluding a $6.1 billion cash outlay to acquire Fairlife, a premium dairy brand Coca-Cola has partially owned since 2012, its free cash flow would have been $3.9 billion—in line with historical levels.

As encouraging as this may seem, investors should note that Fairlife only represents between two and three percent of Coca-Cola’s revenue. So even if Fairlife can double its sales on an annual basis, it will barely move the needle for its new parent company. In other words, Coca-Cola will continue to be the slow-but-steady growth company it has been for some time now. The Fairlife acquisition could, however, help boost KO's dividend and share buyback programs in the future. 

Coca-Cola still trades at a forward P/E of 22.5x. When compared to PepsiCo Inc. NASDAQ: PEP's 17.1x, this translates to a 31.5% valuation premium driven by Coca-Cola’s unmatched global footprint and cash-generating consistency. As Coca-Cola’s most direct peer—and a staple in many of the same dividend-focused portfolios—PepsiCo offers a useful benchmark.

While some institutional investors, like Canada Life Assurance and National Bank of Canada, reduced their KO holdings modestly (by 1.4% and 7%, respectively), the overall sentiment remains stable. The consensus price target from Wall Street analysts is around $77, implying a net upside of 16%. Even after the bearish price action, investors can still lock in an annual 3.09% dividend yield.

Celsius: The Growth Coca-Cola Can’t Provide

Celsius, by contrast, is a pure growth play. CELH trades at over 90% of its 52-week high and delivered a rally of over 26% during the past quarter. Celisus' underlying growth trajectory is purely organic, whereas Coca-Cola's organic growth has come to a sort of natural plateau for companies this big.

In the energy drink category, Celsius competes with more established players like Monster Beverage Corp. NASDAQ: MNST, which has long dominated the space. But Celsius trades at a forward P/E of 65.9x, a 58% premium over Monster’s 41.5x. This indicates that investors are recognizing and pricing in Celsius’s faster growth, expanding margins, and rising brand momentum.

In its latest quarterly report, Celsius posted earnings per share (EPS) of 47 cents, significantly above MarketBeat's analyst consensus estimate of 23 cents. This sparked analyst upgrades, like Goldman Sachs' Bonnie Herzog and Morgan Stanley’s Eric Serotta, who set $72 and $70 price targets, respectively—both well above the $62.40 consensus.

Growth or Stability: Choose Based on What You Need

Despite the dip in free cash flow, Coca-Cola remains a go-to stock for investors prioritizing stability, income, and brand durability. Its fundamentals are intact, and its dividend continues to be a dependable source of long-term return for many investors.

But for those looking to add growth to their portfolio, Celsius offers something Coca-Cola simply can’t: big upside potential. With strong earnings momentum, aggressive market expansion, and increasing analyst support, Celsius is looking more and more like a leader in the next generation of consumer brands.