12/28/2018
Coca-Cola Co NYSE: KO
KO is one of the few stocks I didn't fully liquidate and have kept as a long-term holding. I drew it down because KO gets hit from corrections and bear markets, at least initially, like other stocks. But at this point in the cycle, there will be a flight back into it. So here's my write up of what may be the stock I've referenced most but somehow never wrote specifically about.
Price at write-up $47.30
Indexes (30, 180 day looks)
VIX: 29.09 (53%, 135%)
TED: 48.38
S&P500: 2482 (-7.44%, -14.77)
Valuation Ratios
Target: $50
Coke is like the gold of consumer staples. Sure American consumers have shifted away from the high-sugar core products, and soda consumption is at its lowest point in 30 years, fear not Coca-cola has launched lower-calorie versions of its core products and introduced bottled water, tea, juices, and non-carbonated beverages. Its dividend, even at its current high valuation, is 3.2% outstripping most bonds by around 0.2% and if one were to expect a "flee to safety" there should be some appreciation of the stock price as well in the short term.
The bad news is, everyone is already looking here and with the holidays I'm a few days late as I would have preferred to get it under $46 (my average price is $35). But it is fairly valued right now. Warren Buffet would probably be ok with a purchase. And as a long-term-hold forward-looking evaluations are being touted by various stock evaluators as justifiable suggesting share appreciation and volatility.
My Thoughts
I've been evaluating a new (to me) strategy for an "all weather" portfolio, and while it's not exactly right for me as a prognosticator & value investor, even I have use for it when the crystal ball becomes murky. The idea basically comes from Ray Dalio and his suggestion of:
Conclusion
The bad news is, everyone is already looking at KO and with the holidays I'm a few days late as I would have preferred to get it under $46 (or $42 in May). But it is fairly valued right now. Warren Buffet would probably be ok with a purchase. And as a long-term hold forward-looking evaluations are being touted by various stock evaluators as justifiable even for trades. One could even consider cost averaging in.
It's hard to say if we're in the middle of the bear market I've been expecting or near the end of a correction. If a recession kicks in paying a fair price today could prove to be an excellent move. If there is a substantial rebound in 2019 this price will probably prove to be slightly too high in the near term. But for the next 20 years as 10 to 20% of the targeted 7.5% of assets in consumer staples/commodities, it probably doesn't much matter.
My other "Commodities" include MO, IMBBY, UNH, WMT, DIS, EXC, and would be reasonable considerations in the "commodities" spot, although I got into WMT at some market high (WMT low) just to get out of it sometime around now. But I'd certainly like to have more KO and just glancing at COKE I'm not sure it's price, earnings, and cash flow would fit the bottler into my considerations.
Due Diligence - FIZZ, COKE, MNST, BUD, MO
Coca-Cola Co NYSE: KO
KO is one of the few stocks I didn't fully liquidate and have kept as a long-term holding. I drew it down because KO gets hit from corrections and bear markets, at least initially, like other stocks. But at this point in the cycle, there will be a flight back into it. So here's my write up of what may be the stock I've referenced most but somehow never wrote specifically about.
Price at write-up $47.30
Indexes (30, 180 day looks)
VIX: 29.09 (53%, 135%)
TED: 48.38
S&P500: 2482 (-7.44%, -14.77)
Valuation Ratios
| Price/Earnings (TTM) | 30.38x |
| Price/Sales (TTM) | 6.18x |
| Earnings per share | 1.56 |
| Price/Book (MRQ) | 11.08x |
| Price/Cash Flow (TTM) | 25.37x |
| Held by institutions | 65.87% |
| Short interest | 0.75% |
| Dividend | 3.28% |
| MarketCap | $201.1B |
Target: $50
Coke is like the gold of consumer staples. Sure American consumers have shifted away from the high-sugar core products, and soda consumption is at its lowest point in 30 years, fear not Coca-cola has launched lower-calorie versions of its core products and introduced bottled water, tea, juices, and non-carbonated beverages. Its dividend, even at its current high valuation, is 3.2% outstripping most bonds by around 0.2% and if one were to expect a "flee to safety" there should be some appreciation of the stock price as well in the short term.
The bad news is, everyone is already looking here and with the holidays I'm a few days late as I would have preferred to get it under $46 (my average price is $35). But it is fairly valued right now. Warren Buffet would probably be ok with a purchase. And as a long-term-hold forward-looking evaluations are being touted by various stock evaluators as justifiable suggesting share appreciation and volatility.
My Thoughts
I've been evaluating a new (to me) strategy for an "all weather" portfolio, and while it's not exactly right for me as a prognosticator & value investor, even I have use for it when the crystal ball becomes murky. The idea basically comes from Ray Dalio and his suggestion of:
- 30% Stocks
- 40% 10 yr + Treasuries & Bonds
- 15% 1-5yr Treasuries & bonds
- 7.5% Gold (GLD & IAU)
- 7.5% Commodities
I've muddled this with my general Strategy (Long-Term accumulate + Value investing + Dip&Flip) goal of: 80% of investments as long-term, 50% of assets invested, 10-20% Cash; an unholy Frankenstein's Monster of essentially market timing (which no one should do), risk-adjusted hedging, and cost averaging. Personally, in the current climate, I'm not going to go whole Dalio - in fact, I'm skewing toward less risk (fewer "stocks") - but will grow in that direction over time. Except I don't do commodities so I'm considering that consumer staples and fitting the triangle peg into the square hole, which is not a great idea but it's what I'm doing until I find a better one. And I buy gold as an ETF, just as Dalio does, and occasionally bonds in funds as well.
Conclusion
The bad news is, everyone is already looking at KO and with the holidays I'm a few days late as I would have preferred to get it under $46 (or $42 in May). But it is fairly valued right now. Warren Buffet would probably be ok with a purchase. And as a long-term hold forward-looking evaluations are being touted by various stock evaluators as justifiable even for trades. One could even consider cost averaging in.
It's hard to say if we're in the middle of the bear market I've been expecting or near the end of a correction. If a recession kicks in paying a fair price today could prove to be an excellent move. If there is a substantial rebound in 2019 this price will probably prove to be slightly too high in the near term. But for the next 20 years as 10 to 20% of the targeted 7.5% of assets in consumer staples/commodities, it probably doesn't much matter.
My other "Commodities" include MO, IMBBY, UNH, WMT, DIS, EXC, and would be reasonable considerations in the "commodities" spot, although I got into WMT at some market high (WMT low) just to get out of it sometime around now. But I'd certainly like to have more KO and just glancing at COKE I'm not sure it's price, earnings, and cash flow would fit the bottler into my considerations.
Due Diligence - FIZZ, COKE, MNST, BUD, MO