With third-quarter 2024 revenue of $11.9 billion, a presence in more than 200 countries and territories, and more than 200 different brands under its umbrella, Coca-Cola (KO 0.63%) is the undisputed leader in the non-alcoholic ready-to-drink market. Its industry position is probably one reason Warren Buffett loves the company so much.

Celsius (CELH -0.96%) is a niche player, focusing exclusively on energy drinks. While its shares are currently 72% off their peak, they have still soared an unbelievable 1,660% in the past five years.

Which of these beverage stocks is the better buy today?

Powerful brand and rising dividends

Coca-Cola's most important competitive strength comes from its powerful brand, which supports its economic moat. The business has delivered a consistent product that consumers across the globe have become familiar with, leading to brand loyalty that any company would dream of.

The result is that Coca-Cola has pricing power. Unit volumes declined 1% in the latest fiscal quarter, but favorable pricing helped offset that drop. This is a usual occurrence, again showing  customer loyalty. This adds to the company's durability and staying power.

As a mature business that leads its industry, Coca-Cola reports sizable profits. Its operating margin typically exceeds 20%, demonstrating a scaled and lucrative operation. There is minimal financial risk for shareholders, as profits are still produced in recessionary periods.

High earnings have led to meaningful free-cash-flow generation, to the tune of an estimated $9.2 billion in 2024 (excluding an IRS tax litigation deposit). Investors have reaped the rewards in the form of a dividend payout that has increased 62 straight years. The current yield of 3.15% provides a nice income stream that strengthens returns.

Disrupting the energy category

Celsius was once a darling on Wall Street. In the five years leading up to its peak in March 2024, the stock skyrocketed 7,330%. This was driven by monster growth. Revenue of $1.3 billion in 2023 was 25 times higher than in 2018. That's an incredible gain that certainly propelled investor returns.

But sales took a hit in Q3, tanking 31% year over year due to Celsius' largest distributor cutting back on orders. The business, which has cemented its place as the third largest energy drink company, is learning the hard way just how critical it is to balance surging demand with not having too much inventory. I believe Celsius' latest challenge shines light on the question of whether or not the brand has staying power, as there are always new entrants popping up that consumers are free to try.

Nonetheless, consensus analyst estimates call for revenue and earnings per share to grow at compound annual rates of 10.7% and 15%, respectively, between 2023 and 2026. So, the view is that the company will get back to healthy gains, albeit at a much more muted pace than in the past.

What's your risk tolerance?

As this writing, shares of Coca-Cola trade at a price-to-earnings (P/E) ratio of 25.5. That's about in line with its trailing-five-year average.

Celsius, on the other hand, trades for a P/E multiple of 37.8. This is nearly one-tenth of the 351.9 average over the past five years.

Given Celsius' previous growth, it's certainly dealing with souring investor sentiment. Prospective investors might view the valuation as too hard to ignore.

That might be the case, but what stock you choose depends on your risk tolerance. Celsius is undoubtedly the riskier business to own, as there is more uncertainty about its five-year outlook. The company could get back on track to register market share gains in its category, which can lead to soaring revenue and earnings.

But the probability of this happening is anyone's guess. Of course, for that risk investors receive the possibility of stronger portfolio returns.

For risk-averse investors, Coca-Cola is the no-brainer choice. The company will still be dominating the beverage industry decades from now. Just don't expect market-beating returns from owning the stock.