Patient Investor
Real Estate Developer, Public & Private Equity Investor Since 2016
Coca-Cola is losing current and coming generations, who are more health-focused and switching brands, even if it is safe from AI. Nobody in a personal circle drinks Coke, and the few Gen Z accounts followed on X are focused on health rather than drinking, though that may be a small sample. Per a UCSF doctor, the new generation drinks less alcohol and is more aware of the health damage. x.com x.comÂ
Coca-Cola looks like a short at about 25x forward earnings for a business growing revenue slower than nominal GDP. All of its recent earnings growth has come from cost efficiencies, and it should face huge headwinds from the appetite-suppressing drugs people are taking to stop eating. x.comÂ
Coca-Cola's forward revenue growth numbers are pitiful, yet the stock trades at 26x next-twelve-month EPS, which makes no sense. x.comÂ
Coca-Cola is one of the best businesses ever built and will very likely still deliver investment results 50 years from now. It is far more than sugar water: it owns 500+ brands, including Dasani and Smartwater, and 32 billion-dollar brands. x.comÂ
Coca-Cola's retained earnings do little for shareholders when management does not distribute much of the growth. At 27 times earnings, a 2.3% yield with no expected large dividend hikes, special dividend or meaningful buybacks makes look-through earnings a poor basis for the price: EPS rose about $1 in five years while dividends rose only 52 cents. x.com x.com x.com x.comÂ
Coca-Cola looks like a great funding short, since nothing makes it immune to the risks that battered its staples peers. GLP-1 drugs, store brands, new entrants and supply-chain inflation should hit it too, and non-sugar drinks only slow the U.S. decline, though international has held up better. About 2% revenue growth is thin support for 25x earnings while peers sit at 2008 valuations; it could fall to 15x unless the other staples rebound dramatically. x.com x.com x.com x.com x.com x.com x.com … Show more
Coca-Cola may be the best defensive stock on the planet, with the simplest business model and a brand known everywhere from New York City to tiny villages in Asia. x.comÂ
Coca-Cola's $20 billion-plus tax liability under litigation is significant for a low-margin business; a billion-dollar tax penalty helped sink VF Corp. The stock has lagged the S&P 500 even from the best entries of the past 15 years, having run out of growth since globalization peaked, and its 2.67% dividend is weak against safe, growing alternatives. Spinning off and reacquiring bottlers has handed the alpha to others. x.comÂ
Coca-Cola's safe-haven premium has gone too far. It trades at more than double Ferrari's price-to-free-cash-flow multiple while having the same EBITDA margins and nearly half the expected growth rate. x.comÂ
Coca-Cola is the ultimate safe haven, a holding that stabilizes and protects a portfolio. Since 2008 the best spot to add has been at or under the 200-week moving average; the test of that level at $60 in November 2024 signaled value with a margin of safety. Shares have since reached $84, a 39% climb in 20 months, plus a 2.5% dividend. x.comÂ
PepsiCo stock looks preferable to Coca-Cola here, though neither has matched former Pepsi CEO Indra Nooyi's leadership. Pepsi CEO Ramon Laguarta has had eight years to perform and cannot blame GLP-1 drugs alone; Coke's James Quincey was unappealing from the start, while the view on his successor remains undecided. x.comÂ
