Investing In Coca Cola Stock – Should You Buy Coca Cola Shares?
With the investors always seeking good stocks to buy, Coca-Cola remains at the top tier offering up dependable returns and gaining steady growth. Coca-Cola is among the top names in the world and is among the biggest blue-chip corporations. Investors perceive it as a substantial dividend payer, and at an initial look, it seems like a great fit as an investment if you crave dependable and passive income.
However, in recent years, Coke struggled a little in the world obsessed with healthy eating, and in the fluctuating economy, Coca-Cola saw some rocky times. Yet, Coca-Cola proceeded to generate a strong cash flow and had £2.09 billion following its second-quarter revenue.
Nonetheless, in this article, we will tell you all you need to know about Coke and its position in the stock market and if you should invest in it.
Coke’s Stock Market Status- Blue Chip Stocks
Coca Cola is considered a blue-chip stock and that holds immense value. Blue Chip companies receive their moniker from Poker, where generally the blue-colored chips wield the greatest value. In the stock market, blue-chip corporations are the largest, most popular global corporations, and give their investors reliable dividends despite slow growth.
Ever since going public, Coca-Cola has executed a continuation of high-profile acquisitions and majority-stakes. The notable ones being Minute Maid, Glaceau Vitamin Water, Innocent Drinks, Monster Beverages (MNST), and Costa Coffee.
By diversifying themselves away from merely being a carbonated drink, Coke took the initiative of widening its market scope and cemented its impact on society. Realistically, nobody can get wealthy overnight by holding a blue-chip stock, but your stock portfolio can benefit from carrying a foundation of such dependable assets that give steady cash flow to support your lifestyles.
Coca Cola’s Dependable Dividends
Investors seeking dividends want nothing more than reliable returns and get rewards from their stock. Coke investors have reaped huge rewards from grabbing the stocks, with more than five decades of consistent, dependable dividend progress. The recent annualized dividend payout is 2.5% and pays £0.31 per share.
The existing yield on the share price is 3.32%, which is around what it has been, too. No company can regulate its yield percentage, as it cannot influence its share price, therefore the constant pound returns are something investors prefer when they do a company’s stock history analysis. However, for investors, knowing the existing percentage rate of return is important, and 3.32% is very decent if you can attain capital growth on it, too.
Coke’s Stock Price
As a brand offering mid-league dividend, if it also proposes returns from the stock price growth then it sweetens the deal even more. Investors mainly care about the previous few years when peeking at a stock price as it is an excellent indicator of prevailing performance, and gives an insight into what the future can look like.
With Coca Cola’s consistent history, its share price has been growing steadily at a constant rate, with regular highs and lows. This offers investors some confidence that the company will proceed to encounter price growth to increase investors’ profits from dividends. Moreover, the meager volatility offers investors one comfort that things will not go downhill in one go.
Coca-Cola’s PE Ratio
PE is known as the price-earnings ratio and Coca-Cola has a current Price Earnings Ratio of 19. The price-earnings ratio is computed as Share Price divided by Earnings per Share. Generally, there is no hard rule for what calculates as a good P/E ratio however typically, many investors perceive a lower value to be better and with Coca-Cola’s 19 value, it falls in the good category.
In the past, Coca-Cola’s PE ratio was very high crossing the 20 marks and it was considered overpriced compared to the general market. However, it has settled down to the 19 mark and investors are happy with it.
Coca-Cola Stock – Other Factors
There are several factors investors look at before considering a company’s stock purchase that tells them what they can expect from the company’s future performance and general status. The financial estimates are one thing, but the market overview and industry-standard depict what a brand’s value is in everyday life and how far it has the potential to grow.
Here are some other factors of Coca Cola’s stocks to consider along with numbers
A strong endorsement of stock implies if investment gurus are opting to buy it or not. Enlisted among the top richest men in the world with a net worth of £66.2bn, Warren Buffet is the biggest stock guru and he retains substantial shares in Coca Cola. Investors cannot go wrong by following the choices of Warren Buffet and his shares in the company to show how he believes it to be worthy of long-term investment.
It all comes down to how dynamic is the brand power and Coca-Cola has an immense brand image. The brand has been around for the longest time and has withstood many tests of time. It unfailingly stands among the most globally renowned brands.
All the top artists have starred in its promotions and it is an integral part of the daily lives of endless people worldwide. This substantiates the theory that Coca Cola is a safe business that will resume delivering dividends, and its daily consumption by billions renders Coke a haven in market downturns.
The biggest aspect is how Coke never has to worry much about rivals. It is the market commander in the carbonated drinks market, and its consumers are loyal. Coca Cola is a champion of marketing, with ads showing Coke being preferred by many in their lives.
Coke is a universal company that conquers the market in several developing nations, with constant growth opportunities in foreign markets.
Conflict of Sugar
The planet is coming around to the fact that sugar has immediate connections to diabetes and obesity. Many governments are taking action against businesses offering products containing substantial amounts of an ingredient.
In the UK, the Sugar tax has boosted the price of a Coke bottle above the market rate – but not high enough to render it pricey, but it has had the impact of showing to the public that their daily-consumed drinks may have unhealthy effects. However, fortunately for Coca Cola, among their central products, Coke Zero and Diet Coke are both vastly famous and are recognized as a substitute to the main full-sugar Coke. The sales of Diet Coke and Coke Zero have soared in the last few years. In the UK, Coke Zero is the largest selling drink and even more famous than the original Coca-Cola.
Coca Cola’s less sugar range and dive into non-cola products like its acquisition of Costa Coffee in the UK can also enable them to withstand this sugar conflict and not impact their stock value much. The company has enough backing to ensure its shareholders will not suffer any massive losses.
While a brand has its signature product, it is always better for them to broaden their portfolio. This ensures that investors will keep seeing success and growth and things will not be limited to one product. Folks all around the world know well what a can of Coke is, but the company has a goal to shift its focus to endeavors that are more promising. These encompass drinks like sparkling beverages, energy drinks, juices, plant-based drinks, etc.
The modifications in the business will imply more interconnected operating regions, striving to increase the scaling of fresh products, and fewer chances of duplication. Coca-Cola also spends on social media campaigns and aims to have more famous brands within its portfolio.
Should You Buy Coca-Cola Stock?
With all said and done, we think Coca-Cola is a stable and reliable stock to hold in the portfolio. Its constant dividend, continual share price growth, and powerful brand plus consumer base render it a reliable cash flow asset. Therefore, you should buy its stock because there are more advantages than disadvantages in any economic situation.
Even though its yield may not be that grand, the key in the stock market is consistency. If a brand had a consistent performance then it is consistent and will keep on seeing success. With the rocky economy, the future is littered with possible pitfalls as the health and environmental domains achieve strength in legal backing. While it has not been an easy year for anyone and businesses particularly faced challenges, it is a huge benefit that Coca-Cola is a household name and does not suffer major losses.
Moreover, it is very possible that the drink giant will begin to encounter more increase in sales as restaurants and bars reopen all over. The drinks do not cost much and have become a staple for many people to have while eating.
So overall, Coca Cola is a highly popular brand that will always attain a good position no matter the circumstances. It keeps giving its investors dependable dividends with steady returns on growth so its stock is a definite buy, as many mega investors trust it, too.