Trade Coca Cola Stock
Dr John Stith Pemberton, the inventor of the world’s most famous soft drink, Coca-Cola, was originally from Columbus, Georgia, but moved to Atlanta in 1869. A decade later, he set up his chemical laboratory there in order to get into the business of patent medicine. Amongst his inventions in this field are several well-known products of the time, including Triplex liver pills, Queen hair dye and Gingerine.
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In 1886, Pemberton came up with a concoction that contained sugar, water, coca leaf extracts and kola nuts. He then added caffeine to the mixture and marketed it as a remedy for headaches. Pemberton’s testing and research led him to conclude that the medication he had developed was also able to relieve exhaustion and ease indigestion, while also being a refreshing drink. This was the beginning of the story of the Coca-Cola company.
Today, the Coca-Cola company is the leading manufacturer of soft drinks in the world, selling more than a billion servings of beverages each day. The company’s red and white trademark is arguably the best-known of all corporate brand symbols in the world.
With its headquarters in Atlanta, Georgia, Coca-Cola manufactures 4 of the top 10 most popular soft drinks in the world: Coca-Cola (number one) along with Diet Coke (including Light and Zero), Fanta, and Sprite.
The Coca-Cola company also boasts one of the most extensive distribution networks in the world, offering almost 400 different products to more than 200 countries and territories.
Coca-Cola has a long and rich history of acquisitions. Among the many brands the company has bought are Minute Maid, Columbia Pictures (which was later sold to Sony for $3 billion), the Indian cola brand Thums Up, Barq’s, the Odwalla brand of fruit juices, smoothies, and bars, Fuze Beverage, Honest Tea, and Monster Beverage.
In 2015, the company took a minority stake ownership in Suja Life LLC, the cold-pressed juice manufacturer. At the end of 2016, Coca-Cola bought many of the former SABMiller’s Coca-Cola operations, and in August 2018, the company agreed to acquire Costa Coffee from Whitbread for £3.9bn.
Coca-Cola Stock History
The Coca-Cola Company has a stock market history that is almost as rich as its cultural legacy. It all began in 1919 when a consortium of business people led by Ernest Woodruff (who was Robert W. Woodruff’s father) bought the company for $25 million.
In 1920, the group reincorporated the business as a Delaware Corporation, putting its stock up for sale in its initial public offering (IPO) on the New York Stock Exchange (NYSE).
Common stock was initially offered at $40 per share, with preferred stock sold at $100 per share. Initially, the Coca-Cola Company used the ticker CCO, which was changed in 1923 to KO. Coca-Cola is traded under the Consumer Defensive industry and under the Beverages – Soft Drink sector.
Since the initial offering, the company’s stock has grown exponentially. For instance, one share of common stock bought in 1919 for $40 would be worth nearly $10 million in 2018 if all dividends were reinvested, representing a 10.7% annual increase in value. As of November 2018, Coca-Cola trades at $49.02 a share.
In 1987, Coca-Cola shares were once again added to the list of 30 stocks that make up the Dow Jones Industrial Average (DJIA), an index that is commonly referenced by analysts who examine the performance of the stock market. Coca-Cola had previously been listed on the index between 1932 and 1935. Since 1969, Coca-Cola has paid its shareholders dividends that increase year on year.
With the company’s track record of success, it attracted the attention of one of the most successful investors in history, billionaire Warren Buffett. Buffett’s company, Berkshire Hathaway, started to buy shares in Coke from 1988. As a result of stock buybacks and additional purchases, Buffett’s company now controls 9.3% of the outstanding Coca-Cola stock, making it the beverage powerhouse’s largest shareholder.
How to Trade Coca-Cola Stocks
The Coca-Cola Company has been showing modest but steady growth since 2008. However, the challenges of the 21st century have meant that the soft drinks giant has not had it all easy.
Still, a 130-year history of continuous success and expertise in negotiating difficult times in the stock market has seen the company find a place in the investment portfolios of many of the world’s most renowned investors.
While the stock has periods of upward and ranging trends, there are some factors that cause short-term dips and peaks that are of interest to short-term, CFD traders:
- Volatile Emerging Markets
Although emerging markets can be lucrative and have the potential for high profits, they also come with certain risks that market analysts believe might have negative impacts on the company’s financial performance. Political instability and economic uncertainty in certain parts of the world are forcing Coca-Cola to re-evaluate strategies and to reallocate funds. The Middle East is in the midst of an ongoing crisis and, as a result, is not as prosperous as it once was. Also, China and Russia are suffering from a slowdown of their respective economies, making them less profitable for the Coca-Cola company.
- Economic Forces
Inflation causes the costs of production to rise, which means that Coca-Cola will have to face the inevitable problem of an increase in pricing. However, if the company raises its prices, it risks losing customers who will no longer be able to afford a product that they desire but do not necessarily need. For example, the price of a 2-litre bottle of Coca-Cola has more than doubled in just over a decade (Since 2008). If Coca-Cola is forced to lower prices in order to maintain or increase its consumption, it could be forced to accept lower profit margins, something that could see its stock price take a hit.
- Brand Loyalty Among Millennials
Usually, the strength of the Coca-Cola brand is the first thing that comes to most analysts’ minds whenever the company’s name is mentioned. And there’s a good reason for this: Coca-Cola, which is only one of a host of products in the company’s portfolio, is the fifth-largest brand in the world, as of November 2018. However, there is a big problem – the world’s big brands do not command as much power today as they once did. This is because the Baby Boomer generation that is generally loyal to the brands they grew up with and which they have trusted for years, will spend less after they retire, but the millennials who will then be the largest consumer demographic, are brand-agnostic. Coca-Cola will need to find a way to attract millennials to their product on a larger scale.
Since Coca-Cola is such a popular stock to trade in the financial markets, it is important to look into the impact that all these factors can cause in the short term, rather than in the long term when the Coca-Cola stock price would have accounted for them accordingly.
Disclaimer: This is a general analysis and not to be viewed or construed as actual trading advice or a recommendation of any kind and just an example of how a particular instrument could, potentially, be traded.
Coca-Cola Stock Trading Information:
- MT4 Symbol: #COCA-COLA
- Trading Hours: Monday – Friday, 14:30-20:59 GMT London Time
- Currency: USD
- Country: US
- Exchange: NYSE
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Disclaimer: Please note these are stock CFDs (Contracts for Difference)
When you enter into a CFD trade you don’t buy the actual stock itself but instead agree on a contract with the broker to settle the difference in value between the entry and exit price of the Stock based on the price the stock is trading at on the Exchange it is listed. That means when you trade Stocks CFDs with Friedberg Direct you get a flexibility that stock market rules often make very difficult or even impossible for some.