KO Stock Analysis – Is Coca Cola Stock A Buy?

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How's it going today guys welcome to Stock radar I am so excited about this I've been planning on doing this for Months now and I am officially launching Stock radar we're going to be doing Weekly stock analysis as well as bonus Stock market related videos that will Only be available through this Membership and I'm just so excited I'm Glad to have you guys here and we're Going to start off by talking about the Company known as Coca-Cola one of the Best stocks to invest in Period and a Great pick for beginners so let's go Ahead and get started and start this Discussion analyzing Coca-Cola so first Of all as we said the company is Coca-Cola and they trade under the Symbol KO now how old is Coca-Cola this Company is 126 years old a very old and Time-tested Company so who do I Recommend this stock for Coca-Cola is a Great stock for beginners if you're Looking to just get started with the Stock market you're looking to get your Feet wet you're looking to earn a Dividend and not have any kind of crazy Volatility then Coca-Cola is an Excellent choice for beginner investors But it is also a great addition to any Stock Investing portfolio so let's go Ahead and talk about the price to Earnings ratio we're going to talk about The fundamentals later on but they

Currently have a price to earnings ratio Of 42 and a market capitalization of 190 Billion dollars they are a gigantic Company a very old company time tested With a reasonable price to earnings Ratio as well now as far as that Dividend goes many people invest in Coca-Cola because they pay a very Consistent dividend as of right now Their dividend is 3.32 percent and they Have a 98-year streak of paying Dividends they're closing in on a 100 Year dividend payment streak which is Absolutely incredible and how long has That dividend been growing the answer is 55 years over the last 55 years they Have increased that dividend payment to Shareholders every single year so as far As a beginner stock goes in an income Stock there's is really not much else Out there as good as Coca-Cola in terms Of the consistency with that dividend The growth streak and the history of Paying that dividend but let's go ahead And dive a little bit deeper here with Coca-Cola and talk about some of the Pros and the cons of being a Coca-Cola Investor so first of all one of the Biggest pros of Coca-Cola is that they Are the world's biggest Beverage Company Most people probably had a Coca-Cola Product today whether or not they know It most people think that Coca-Cola Sells soft drinks but you guys have no

Idea how many different beverages Coca-Cola is involved with under their Name how many different brands are under Their name in fact they have over 3 900 Brands under the Coca-Cola name so you Probably won't even know whether or not You're drinking a Coca-Cola product Because they sell so many different Beverages out there another Pro to Investing in Coca-Cola is the fact that Warren Buffett is an investor in this Company and anytime you see Warren Buffett investing in a company that is Usually a bet for success with that Investment Warren Buffett owns over 400 Million shares of Coca-Cola now as I'm Sure you guys know Warren Buffett is a Long-term value investor and if you guys Are looking for a successful investing Strategy I'd recommend following the Strategy of one of the greatest Investors of our time if not the Greatest investor the man himself Warren Buffett so if you're investing in stocks He's invested in you should have Confidence that this is a good pick Another big plus for Coca-Cola is their Global footprint this is a global Company and they are operating in over 200 countries so a lot of the sales Actually and the revenue are from Outside of the U.S and as an investor It's important to not only invest in U.S Companies but also invest in companies

With a global footprint that way you are Less impacted by the U.S market itself And if you're looking to get Global Exposure through a U.S company Coca-Cola Is a fantastic choice now in terms of Revenue 52 percent of Coca-Cola's Revenue comes from overseas so most of The revenue is coming from outside of The us and that is great for people Looking to have Global exposure because They are involved in markets outside of The U.S and the reason you want to have Global exposure is because you don't Want to be too heavily impacted by one Market typically speaking when the U.S Stock market goes down other markets are Affected as well but being Diversified Into different markets is always a plus Because if one market is performing Poorly typically other markets are not Performing as poorly and it diversifies Your exposure across different markets Now you have a couple of options you can Go out there and invest in global index Funds but this is a great option here For beginners because you can just buy This stock and rest assured knowing that You have Global exposure through this Great U.S company now this really blew My mind but just how big is Coca-Cola Seeing as they are a beverage company One of the best ways to look at this is Asking yourself how many beverages are Consumed per day that are Coca-Cola's

Beverages and the answer is 1.9 billion 1.9 billion Coca-Cola beverages are Consumed every single day that is almost One third of the population is consuming A Coca-Cola beverage every single day Looking at numbers like that now Probably some people are consuming two Or three because as we said they have Over 3 900 Brands so they might be Consuming two or three beverages Something like that but to have 1.9 Billion consumed per day is astronomical That just goes to show you how large Coca-Cola actually is now another big Pro for Coca-Cola is a newer technology They are working with and that is their Freestyle machines that is where you can Go into a restaurant and you're not Limited to the seven rig drink Selections you have dozens of drink Selections because they are made on Demand now most people don't realize This but this is actually so Coca-Cola Is able to collect data on beverage Consumption that's not the main purpose Of this the main purpose of this is to Give people choice and let them have Customization Coca-Cola is big on Customization and especially young People we are looking for this because We want a more diverse array of products Now on top of that customization piece I'm sure you have noticed that Coca-Cola Beverages that include people's names

That is a great marketing strategy that Makes people buy Coke products because They see their name or they see their Friend's name and they want to buy them A Coke as that old saying goes whether It's pinch Pokemon Coke whatever it is And again that ties into the strength of This brand as there are sayings and such That go along with Coca-Cola but through Those freestyle machines they are able To test out different beverages collect Data as far as what beverages are the Most popular and if they want to test Out a new beverage they don't have to Roll it out to the consumer and bottle It and sell it that way they can test it Out in their freestyle machine to Determine whether or not it's going to Be a big seller but now that we're Talking about the actual bottling of Beverages let's talk about what business Coca-Cola is actually involved with Because it's not what you might think it Is so Coca-Cola produces concentrates And syrups which are produced into the Actual beverages by the actual Restaurants themselves or by independent Bottling companies now Coca-Cola was Involved with the bottling business for Quite some time but they are actually Exiting that business for a number of Reasons they are selling off their Bottling plants and they are instead Going to work with trusted franchisees

Now this is a logical move for Coca-Cola Because the actual process of converting Those syrups and concentrates into Physical beverages is not a very Profitable business and it's not really A business they want to be involved with Anymore they simply want to have the Recipes have the patents send those Concentrates over to the Packers and Have them produce the Beverages and them Do that side of the business they don't Want to be involved in that side of the Business and they are slowly getting out Of that by selling off the bottling side Of their business so Coca-Cola's plan is To simplify the business focus on their Core Brands and increase profitability By selling off a part of the business That is really not very profitable and It's not a business they want to be Involved with so another Pro for Coca-Cola is the fact that they have Beverage diversification they are Involved in a lot of different beverages Outside of just the soft drinks and the Sodas and let's go ahead and talk about That now what beverages are Coca-Cola Involved with so traditional soft drinks Are the bread and butter for Coca-Cola Making up 50 percent of that business And they have brand names like of course Coca-Cola Fanta and Sprite and many more Than that as well energy drinks are also A big seller for Coca-Cola they have a

Large steak in Monster and that accounts For 15 percent of their business as far As the beverage diversification goes now Water and sports drinks make up 15 Percent of that business they have Brands like Dasani Powerade and Smart Water ready to go coffee and tea Products make up 15 percent of the Business they have Brands like fuse and Peak iced tea and then the final 10 Percent of their beverage business comes From juice dairy products and Plant-based products and they have Brands like Minute Maid and simply Orange Under the Coca-Cola name so just For a recap here the pros for investing In Coca-Cola are the fact that they are The world's biggest Beverage Company Warren Buffett is a large and investor In this company they operate in over 200 Different countries with over 3 900 Different brands giving them a global Footprint 1.9 billion Coca-Cola Beverages are consumed every single day The freestyle machines allow for more Customization and allow them to become a Data company and then also through the Beverage diversification they are Offering products for all kinds of Different customers out there and Branching out into new segments and Another thing to touch on is the fact That Coca-Cola is one of the world's Most recognized Brands I know personally

I own a Coca-Cola t-shirt and when People are actually buying the brand to Put on their shirt and walk around in Public because they think it's cool and Unique that is when you know you won When it comes to branding when people Just wear your brand because they want To advertise it people don't realize Every time you buy a Coca-Cola shirt or A mug that you are advertising that Company and Coca-Cola has just slammed It out of the park with their brand Strength they have one of the strongest Brands out there in my opinion it's Between Apple and Coca-Cola as far as Who has the stronger brand but it's one Of those two but now let's move into the Cons for Coca-Cola there aren't too many But I do want to mention these things First of all they do need to worry about Avoiding stagnation where eventually They become so large that there's not Much growth potential for them they're Involved in so many Global markets that There isn't much room for them to grow Elsewhere or maybe they are stagnating As far as the beverages they are Offering but if they continue to Diversify into different Beverages and Find new markets and find new ways to Better serve customers then this Shouldn't be a problem for them we are Seeing unique things like that freestyle Machine and the coke beverages with the

Names these unique marketing practices That are generating more sales and so I Don't think that stagnation is a big Threat for Coca-Cola another con is the Fact that this restructuring effort Where they are selling off the bottling Part of the business and instead working With franchisees that may be complicated And time consuming for Coca-Cola but Long term this is good because it will Lead to better profitability as this is Not a side of the business they want to Be involved with and frankly I don't Blame them another con is the fact that The youth and the Millennials are very Picky about what they are drinking these Days and what they are consuming and They need to focus on staying relevant With the youth and offering brands that Resonate well with young people who are Increasingly more health conscious and That ties into the final con is the fact That people in general are becoming more Health conscious and the bread and Butter for Coca-Cola is the soft drink Business and as I'm sure we all know Sugary beverages are not good for your Health but as long as they continue to Offer other products you know water Beverages tea products coffee products That are lower in sugar and better for Your health I don't see this being a big Threat for Coca-Cola so now let's talk About the barriers to entry for

Coca-Cola what stops someone from Starting a new Coca-Cola type business Tomorrow first of all the fact that they Are the world's largest beverage company And they have one of the world's Strongest Brands if you're trying to get Brand recognition it's going to be Impossible to match what Coca-Cola has In fact Warren Buffett said it best when He said If someone gave him a hundred Billion dollars and asked him to compete With Coca-Cola and take away that World's strongest Beverage Company title He would give them back that money and Say it can't be done he believes that You cannot Dethrone Coca-Cola and I Strongly agree with his opinion so the Biggest thing Coca-Cola has going for Them is that brand that brand strength And the fact that people absolutely love Coca-Cola they're willing to wear it on Their shirts and have it on their mugs It is really a brand that people love And they are proud to show it off Another barrier to entry is the Technology as we said they are more and More becoming a data oriented company With those freestyle machines being able To test out beverages without spending a Lot of money selling the actual Beverages in stores they can instead Test them out in their machines for the Low price cost of those concentrates and It's not going to be as expensive as

Rolling out a brand new beverage and Some selling it in a storefront location Because smaller businesses are most Likely going to be involved with the Bottling side as well as the concentrate Side so it's going to be more expensive For them to test out beverages while Coca-Cola has the perfect Network to Test out new beverages at a very low Price next on the list is their supply Chain connections and their distribution Network being in over 200 countries you Can't even argue with that there would Be no way to compete with Coca-Cola in Terms of their supply chain and their Distribution Network the number of Connections that Coca-Cola has is Unbelievable and if you are trying to Launch a beverage company and trying to Distribute your beverage all over the World you would have a very hard time Competing with the network that Coca-Cola has built over the years and Then finally you have the array of Beverage patents that Coca-Cola has as Well as the high costs associated with Entering this space that is what Protects Coca-Cola from someone going Out there and taking away market share And undermining their business so that Is all we have here on Coca-Cola in Terms of the pros and hands the dividend And the barriers to entry now we're Going to talk about the fundamentals of

Coca-Cola so now we are going to look at Some of the fundamentals of Coca-Cola First of all we're going to be looking At total assets and we see that total Assets improved from 2013 to 2014 but Then declined in 2015 and 2016 as well Now total assets improved from quarter Four of 2016 to quarter one of 2017 However they declined in both quarter Three and quarter four of 2017 Thereafter short-term and long-term Investments have increased from 2013 to 2016 and inventory has been shrinking Since 2013. now cash and cash equivalent Significantly increased from quarter Four 2016 to quarter 3 2017 so Coca-Cola Is now sitting on more cash analyzing The quarterly data it appears that total Assets are steady which is something That is to be expected from such a large Company for quarter three of 2017 total Assets sat at 90 billion 515 million Which is very close to where they were Back in 2013 at 90 billion 55 million so What we are seeing here by analyzing Coca-Cola's assets is consistency and That assets are steady there is not much Growth but again that is not something You would expect to see from a company That is already so large next we are Going to look at Coca-Cola's liabilities Now long-term debt significantly Increased from 2014 to 2015 and again in 2016 and long-term debt has been

Increasing from quarter four of 2016 to Quarter three of 2017 so what we are Gathering from this is that total Liabilities for Coca-Cola are on the Rise now one thing I do not like about This is the fact that total liabilities Are increasing while total assets are Steady which means their debt is Increasing faster than their assets Particularly the long-term debt for Coca-Cola however current assets are Maintaining healthy coverage of current Liabilities which means assets that are In cash or readily convertible to cash Within the next year are covering all of Their short-term debt looking at total Equity it has been in Decline since 2013 However total Equity improved from Quarter to of 2017 to quarter three of 2017. what we are also seeing is that Total revenue and gross profit has been In Decline since 2013 and we were Expecting to see total revenue decline In 2016 due to those restructuring Efforts Coca-Cola is currently going Through however total revenue did Improve from quarter one of 2017 to Quarter Two of 2017 but then declined in Quarter three of 2017 and the same thing Happened with gross profit it improved From quarter one of 2017 to Quarter Two Of 2017 and did decline in quarter three Of 2017 but it was to a level above Quarter one of 2017. so looking at

Coca-Cola stock here's what we can Gather Coca-Cola has had lackluster Performance over the last five years Especially when you compare it to the Return of the Dow Jones Industrial Average because Coca-Cola is one of the Companies listed on this index so Coca-Cola stock is up 8.6 percent over The last year compared to a 22.2 percent Return from the Dow Jones Industrial Average so they have significantly Underperformed the index they are Involved with and looking at the last Five years Coca-Cola stock is up just 16.2 percent compared to a 79.9 percent Return from the Dow Jones Industrial Average so this stock is suitable for Income investors or beginners looking For a stable investment as a beginner in The stock market you're not looking for Volatility you're looking to invest in a Company that is going to give you slow And steady growth over time and while You may not be seeing growth with the Share price you will be getting those Regular cash payments those dividends That Coca-Cola is well known for so Coca-Cola is a very conservative Investment it is good for income Investors and beginners but it may not Be aggressive enough for a seasoned Investor however Coca-Cola is still one Of the best stocks out there for a Complete beginner to get some exposure

To the market and learn more about Investing and finally we're going to Wrap up with some key financial notes so These restructuring efforts we talked About how Coca-Cola is getting out of The bottling side of the business have Hurt revenue and earnings in the short Term but in the long term this appears To be a positive for Coca-Cola as it Will allow them to be more profitable so As we mentioned about these Restructuring efforts they have hurt Earnings and revenue in the short term But in the long term this appears to be A positive for Coca-Cola as they will be Focusing on the more profitable side of The business in fiscal year 2016 Revenue Fell six percent and earnings fell five Percent and for 2017 these restructuring Efforts were expected to result in an 18 Drop in sales but only a four percent Drop in earnings and in 2018 earnings Are expected to increase two to three Percent as margins improve and share BuyBacks are expected to continue in 2018 reducing outstanding shares by one To two percent per year anyways guys That wraps up our analysis of Coca-Cola I hope you guys enjoyed this video and I Will see you in the next one

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