Legendary investor Warren Buffett loves Coca-Cola (KO)... Buffett's Berkshire Hathaway (BRK-B) first bought Coca-Cola shares in the late 1980s. And more than three decades later, his holding company still owns about 9% of Coca-Cola.
For Now, the Power Gauge Prefers the 'Other Coca-Cola'
By Marc Gerstein, director of research, Chaikin Analytics
Buffett's Berkshire Hathaway (BRK-B) first bought Coca-Cola shares in the late 1980s. And more than three decades later, his holding company still owns about 9% of Coca-Cola.
It's not just Buffett, either...
Coca-Cola is owned by 384 exchange-traded funds ("ETFs"). And in 61 ETFs, it makes up at least 2% of the portfolio.
Consumers love Coca-Cola, too. According to Brand Finance, it's the top-ranked soft-drink brand, with a value of $35.4 billion. PepsiCo (PEP) is second at roughly $20.7 billion.
The Power Gauge wants to love Coca-Cola's stock as well. In fact, it has fluctuated between "bullish" and "neutral+" for the better part of this year.
The flip-flop ratings are happening because of the Federal Reserve's continued interest-rate shift. It's worrying the market. And it keeps pushing the stock below its long-term trend.
But there's good news for Coca-Cola fans...
As I'll explain in today's essay, the Power Gauge is more convinced about the "other Coca-Cola" right now. And as a result, this investment could be worth considering...
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In short, the Power Gauge ranks Coca-Cola FEMSA SAB de CV (KOF) as "very bullish."
I can hear you now... Coca-Colawhat de what?
To keep things simple for the rest of this essay, I'll just call it the "other Coca-Cola."
I'm sure Buffett has heard of this company. But I don't know how many other folks have. Only six ETFs own shares today. And it accounts for 0.75% or less in these portfolios.
Now, I don't see "10-bagger" potential with the other Coca-Cola. But nevertheless, it offers appealing prospects relative to the main Coca-Cola...
First, as I've alluded to, the two companies are related. Coca-Cola owns roughly 28% of the other Coca-Cola's equity. (Latin American beverage retailer FEMSA owns another 47%.)
And importantly, the other Coca-Cola is a very valuable business partner...
In the soft-drink industry, the "name" (Coca-Cola, in this case) mainly makes syrups and concentrates. And the product bought and appreciated by consumers often comes from independent bottlers.
These companies buy the syrup from the parent company. They produce, package, and distribute the final products.
The other Coca-Cola is the largest bottler-distributor for the parent company. That includes Coca-Cola's large portfolio of other soft-drink brands (such as Sprite, Fanta, and Fresca) and its noncarbonated beverages (like Dasani and Powerade).
The other Coca-Cola operates in key regions of Latin America. It's active in highly populated areas of Mexico, Central America, Colombia, Brazil, Uruguay, and Argentina.
Business is presently brisk throughout all of its territories. That's reflected in its "bullish" ranking for earnings trend. (Meanwhile, Coca-Cola is ranked "neutral" in this factor.)
The other Coca-Cola also ranks higher than the main Coca-Cola in the estimate trend factor of the Experts category. (It's "very bullish," while Coca-Cola is "neutral.")
So far, it looks like the other Coca-Cola is modestly better. And valuation is where the company really pulls ahead right now...
The other Coca-Cola ranks "bullish" in both the price-to-sales and projected price-to-earnings ratios. Meanwhile, the main Coca-Cola is "bearish" and "neutral," respectively, for those two factors.
More often than not, the main Coca-Cola is a strong performer. Investing legends like Buffett have made piles of money from the stock over the past few decades.
But right now, the Power Gauge slightly favors the other Coca-Cola.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-3.07%
1
24
5
S&P 500
-3.38%
104
272
121
Nasdaq
-4.10%
17
56
27
Small Caps
-3.35%
448
956
443
Bonds
+0.75%
— According to the Chaikin Power Bar, Small Cap stocks are somewhat more Bullish than Large Cap stocks. Major indexes are mixed.
* * * *
Top Movers
Gainers
EA
+3.57%
MOH
+3.36%
TTWO
+1.59%
CF
+0.81%
COP
+0.04%
Losers
MMM
-9.54%
NVDA
-9.23%
HPQ
-8.94%
ALGN
-7.52%
MPWR
-7.35%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
HEI
AZO, CTLT
No earnings reporting today.
Earnings Surprises
No significant Earnings Surprises in the Russell 3000.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+4.27%
Materials
-1.26%
Utilities
-2.56%
Staples
-3.20%
Industrials
-3.36%
Financial
-3.60%
Real Estate
-3.80%
Health Care
-4.24%
Communication
-4.39%
Discretionary
-4.69%
Information Technology
-5.56%
* * * *
Industry Focus
Insurance Services
12
36
4
Over the past 6 months, the Insurance subsector (KIE) has outperformed the S&P 500 by +4.70%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #5 of 21 subsectors.
Top Stocks
UNM
Unum Group
RGA
Reinsurance Group of
AFL
Aflac Incorporated
* * * *
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