Giles Coghlan LLB, Lth, MA
Financial Source
Always Coca-Cola? That’s the thinking! Many consumers should always have the ability to buy a can of coke – even in a recession. That’s why many investors see Coke as a recession buster!
Coca-Cola earnings were very good in April: sales surged 16% to $10.5 billion, beating Wall Street’s expectations of $9.8 billion. Profits of $2.8 billion, or 64 cents a share, rose 24% from a year ago – surpassing consensus estimates of 58 cents a share.
Furthermore, despite rising aluminum prices and other inflationary forces noted the company has a strong outlook for the rest of the year. The ‘recession proof’ label that Coke has may also attract further investment. It is also noteworthy that Warren Buffet is a big backer in Coke stoke and he currently has 400 million shares!
Over the last 10 years Coca-Cola has lost value only once between May 24 and July 21. The average return has been +2.82% and the maximum return has been over 7.16% at 11.74%.
Does that mean Coca-Cola shares will gain again this year? Are they a good recessionary proof play?
Major Trade Risks: Any bad news for Coca-Cola stock will negate this outlook.
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