Investment Strategy for Late 2026: Should You Bet on Celsius’s Recovery or Opt for a Coca-Cola and PepsiCo Split?

Key Points

• Celsius remains a high-risk, high-reward play as it integrates various energy drink brands and attempts to revitalize its flagship product.

• Major players like Coca-Cola and PepsiCo are successfully entering the health-conscious market with prebiotic and functional beverages, limiting the competitive advantage of smaller brands.

• A balanced investment in Coca-Cola and PepsiCo provides diversification, reliable dividend income, and exposure to the energy sector with significantly lower volatility.

It has been a challenging period for energy drink innovator Celsius Holdings (NASDAQ: CELH). The stock has declined approximately 36% so far in 2026 and is currently trading well below its yearly starting point.

Such a significant drawdown typically divides investors: some see a fundamentally broken business model, while others see a buying opportunity.

This presents a compelling comparison for the latter half of the year: is it wiser to purchase the discounted growth stock, or to split your capital between two industry leaders, The Coca-Cola Company (NYSE: KO) and PepsiCo (NASDAQ: PEP)?

The preference for the industry giants is driven more by strategic positioning than by mere price action.

Image source: Getty Images.

The Strategic Evolution of Celsius

To be fair, Celsius is aggressively evolving. The company has transformed from a single-brand startup into a diversified energy drink portfolio, incorporating the growing Alani Nu brand and the Rockstar brand acquired from PepsiCo. This expansion provides Celsius with a significant share of the U.S. energy market and enhanced retail presence.

However, underlying issues persist. The original Celsius brand has seen a loss of momentum, with several product lines slowing down in recent months. When a company is valued based on rapid growth expectations and its primary product loses steam, the market responds with swift sell-offs, contributing to the current decline in share price.

While a turnaround is possible, it remains a concentrated bet on a single category—energy drinks—and relies on management’s ability to integrate three distinct brands effectively.

Incumbents Are Adapting to Health Trends

One critical factor often overlooked is that the functional and “better-for-you” beverage trend—the very wave that propelled Celsius—is being captured by the industry leaders.

Coca-Cola has introduced Simply Pop, a prebiotic soda focused on gut health with added vitamins. PepsiCo has taken an even more aggressive stance by acquiring the trendy prebiotic brand Poppi and launching its own Pepsi Prebiotic Cola nationwide, while simultaneously reformulating core products to reduce sugar and artificial additives.

Essentially, the trend that threatened to make legacy soda companies obsolete is being absorbed by them. This diminishes the primary argument for choosing a disruptor over established incumbents.

When legacy giants can simply acquire or develop the next big trend, their massive scale becomes a competitive advantage rather than a burden.

The Value of Diversification and Stability

This is where a 50/50 split between Coca-Cola and PepsiCo becomes highly attractive. Neither company is dependent on a single product or category.

Coca-Cola maintains a vast presence across sodas, water, sports drinks, coffee, and juice globally. PepsiCo complements its beverage portfolio with Frito-Lay, one of the world’s most dominant snack businesses, providing a hedge if the beverage sector faces a slow quarter. Holding both companies further mitigates risk.

Additionally, both companies are consistent dividend payers with decades of growth, allowing investors to earn steady income while waiting for long-term appreciation.

In contrast, Celsius offers no dividend and requires investors to endure high volatility in pursuit of potential price gains. For a second half of the year characterized by potential market turbulence, the ability to earn income while waiting is a significant advantage.

Summary for Investors

Another persuasive factor is PepsiCo’s existing relationship with Celsius; PepsiCo holds a stake in the company and manages its distribution. Consequently, if the energy drink sector continues to boom, PepsiCo captures part of that growth automatically without requiring the investor to take concentrated risk in energy drinks. Investing in PepsiCo is effectively a way to gain exposure to the Celsius trend through a much more stable business.

This does not mean Celsius is a lost cause. If its core brand recovers and international expansion succeeds, the current low valuation could lead to a sharp rebound, which may appeal to risk-tolerant investors.

However, for the second half of 2026, a 50/50 split of Coca-Cola and PepsiCo appears more prudent. It offers global diversification, rising dividends, and exposure to companies that are successfully adapting to health trends rather than being disrupted by them.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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