Weiss Ratings backs Coca-Cola, Visa as oil volatility reshapes U.S. stock picks

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Weiss backs Coca-Cola, Visa stocks

Highlights

Weiss Ratings highlights defensive plays as U.S. crude fell 8% Wednesday then rebounded 2% Thursday, with Brent crude still expected near $105 a barrel in Q4.
Coca-Cola and Visa outperformed the S&P 500 in 7 of 9 major oil swings since April, prompting Weiss to reiterate BUY ratings on both stocks.
Weiss warns of cost and volume risks for Coca-Cola and potential swipe fee legislation for Visa, but maintains preference for stocks less tied to oil price moves.

Oil swings drive defensive stock selection

As reported by Weiss Ratings, U.S. crude fell about 8% on Wednesday on hopes for a deal with Iran after Democrats won Congress, then rose about 2% in Thursday trading after Axios reported that the U.S. military is preparing for a possible return to major combat.

The research note argues that energy markets are still reacting to headlines rather than a lasting geopolitical reset. AAA puts the average price of regular gasoline at about $4.10 a gallon on Thursday, while GasBuddy says pump prices could keep falling in the weeks ahead. At the same time, the government's energy forecaster still expects Brent crude near $105 a barrel in the fourth quarter, above Wednesday's settlement level.

Weiss says it reviewed nine major oil drops and rebounds since April and found that Coca-Cola and Visa each outperformed the S&P 500 in seven of those episodes. By contrast, the Energy Select Sector SPDR beat the index in every rebound but lagged it in every drop, reinforcing the firm's preference for businesses whose sales are less tied to the next move in oil.

Weiss rates Coca-Cola A-, a BUY, with Reward at A+ and Risk at B. Visa is rated B+, a BUY, with Reward at A+ and Risk at C+, while Travelers is rated A+, a BUY, and Berkshire Hathaway is rated A-, a BUY.

Risks remain for consumer and payments names

Coca-Cola closed Wednesday at $95.80, about $2 below the average Wall Street target cited in the note. Weiss says the stock is more of a holding than a quick trade, pointing to third-quarter unit case volume growth of about 5%, a higher full-year outlook and a quarterly dividend of $0.53 a share, or about a 2.2% annual yield at Wednesday's close.

The firm also flags risks for the beverage maker, saying cost pressures have accelerated and North American volume was flat. It says it would reassess the call if the company's next report shows North American volume turning negative.

Visa closed Wednesday at $436.57. Weiss says the payments group benefits from card usage across spending categories, whether consumers are paying for gasoline or other purchases, but warns that a bill to cut card swipe fees, endorsed by President Trump in January, could gain support in a Democratic Congress.

The note also says a durable Iran deal that keeps oil down could improve the case for airlines, particularly Southwest, which Weiss rates B-, a BUY, while Delta and United are rated C+, a HOLD. Even so, the firm says it prefers companies that do not depend on any single oil outcome, adding that steadier stocks can still lag when large technology shares such as Microsoft rally.

Oil shipping costs surged as conflict-related risks disrupted key tanker routes, turning freight into a major component of crude pricing. We previously reported that rerouting and higher insurance premiums pushed transport costs sharply higher—pressuring gasoline and consumer prices—while creating a windfall for tanker owners and squeezing import-dependent markets and refiners.

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