Author Topic: Cracking into an ice cold coca-cola?  (Read 954 times)

dragonwalker

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Cracking into an ice cold coca-cola?
« on: March 12, 2020, 08:53:21 PM »
I have $50K that I'm willing to put into something to make a quick buck in. The markets seems to be freezing over and I thought I'd get in with Coca-Cola (KO). Down to $46.60 in after hours trading from a high of $60. My time line is more short term to 1-2 years. I like that it's normally a safe stock that pays a great dividend currently a 3.5% annual. Those of you who know more about the fundamentals of the stock what do you think?

I know this is market timing but I want to see how feasible it is to come in make about $10K and then sell or maybe stay in longer if this virus paranoia blows over more quickly than I'm hoping. Thanks.

Little Aussie Battler

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Re: Cracking into an ice cold coca-cola?
« Reply #1 on: March 12, 2020, 09:01:04 PM »
What does their supply chain look like?  How reliant are they on public events and gatherings for sales?  If there is a broader economic downturn, how will their sales hold up (i.e. is coke and its associated products discretionary goods)?

Ignoring the market timing element of this (I'm not as militant on this point as most others on this forum), your investment horizon appears to be far too short to make this a good risk/reward play.

terran

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Re: Cracking into an ice cold coca-cola?
« Reply #2 on: March 12, 2020, 09:18:12 PM »
You very clearly don't know why this stock has lost a good chunk of value. That should make you afraid enough that you don't gamble on this individual stock. If you knew something the rest of the market didn't you wouldn't need to ask these questions here.

dragonwalker

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Re: Cracking into an ice cold coca-cola?
« Reply #3 on: March 12, 2020, 09:39:15 PM »
@terran, I'm confused by what you are saying. Regarding why KO has lost a good chunk of it's value? Isn't it obvious the Coronavirus fears? I really don't understand your next sentence. All I meant to say is here is a stock, I have heard some news and suggestions it may be a good buy. Tell me good people right or wrong and why?

terran

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Re: Cracking into an ice cold coca-cola?
« Reply #4 on: March 12, 2020, 10:05:34 PM »
@terran, I'm confused by what you are saying. Regarding why KO has lost a good chunk of it's value? Isn't it obvious the Coronavirus fears? I really don't understand your next sentence. All I meant to say is here is a stock, I have heard some news and suggestions it may be a good buy. Tell me good people right or wrong and why?

Maybe, maybe not. If you don't know something the rest of the market doesn't then trying get it right with a single stock is nothing more than gambling. Stick with index funds until/unless you have specialized knowledge that all the experts don't have. I certainly don't.

theolympians

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Re: Cracking into an ice cold coca-cola?
« Reply #5 on: March 13, 2020, 01:23:28 PM »
The company is a century old, people drink it all over the globe. I think it is a good investment long term. If you are "looking to make a quick buck", then you are not really investing. If you are buying the dip, go ahead.

FIRE 20/20

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Re: Cracking into an ice cold coca-cola?
« Reply #6 on: March 13, 2020, 02:08:02 PM »
If you have specific knowledge about the company that tells you that the thousands of professional investors and automated trading algorithms are getting the value wrong, then go for it. Keep in mind that these people study companies like this in depth, and they generally get it right enough that you cannot beat them.  But if you want to bet against the smartest, most knowledgeable people on the planet then go for it.  You might be right or you might get lucky.  Just be sure to post the details here so you can come back to gloat later.  Good luck!

Bernard

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Re: Cracking into an ice cold coca-cola?
« Reply #7 on: March 13, 2020, 04:55:59 PM »
You can buy any great company at the dip and watch the tide to carry it up again. That can be Coca Cola, Berkshire, Apple, Amazon . . . you name it. The primary problem you and we all have is to identify the bottom. Have we reached it or will the DOW go lower?  Once you have solved that problem,you are on the path to become very wealthy. Even Warren Buffet may have bought his close to 1M share of Delta a few days to early.

ChpBstrd

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Re: Cracking into an ice cold coca-cola?
« Reply #8 on: March 13, 2020, 10:53:59 PM »
If you really want to speculate, buy a call option on KO.

For the Jan 21, 2022 expiration date, you could buy the call with a $50 strike (about what it is today) for about $6.10. This gives you the option, but not the obligation, to buy KO up until that date. And instead of putting $50 at risk, you're putting $6.10 at risk. So for the same investment amount, you could have 9x the leverage (although your risk of total loss would be much higher if you levered that high).

If KO goes from $50 to $60 as you think it will, that option will be worth $10 in Jan 2022, a 64% gain instead of the 23.5% gain you'd get from the stock, dividends included. You could actually earn more than that if, for example, KO gets to $60 in only a few months and there is lots of time value remaining on the option.

But if KO hangs out at $49 for a year - you'd lose 100% of your investment instead of 2%.

dragonwalker

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Re: Cracking into an ice cold coca-cola?
« Reply #9 on: March 13, 2020, 11:38:18 PM »
Ok so I thought about some points people brought up. I decided this morning that I don't know enough about the fundamentals of KO to take a risk and buy just that one stock so I decided to go with VTI instead. Most of my money is with the similar VSTAX anyway so it's really me just buying more of the same. Obviously not as sexy as KO but more grounded and safer. I know it's quite meaningless to say this but I'm glad that I finally "timed" it right today and it's up nearly 10% in just 1 day. We'll see how it goes!

ChpBstrd

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Re: Cracking into an ice cold coca-cola?
« Reply #10 on: March 14, 2020, 08:33:18 PM »
Ok so I thought about some points people brought up. I decided this morning that I don't know enough about the fundamentals of KO to take a risk and buy just that one stock so I decided to go with VTI instead. Most of my money is with the similar VSTAX anyway so it's really me just buying more of the same. Obviously not as sexy as KO but more grounded and safer. I know it's quite meaningless to say this but I'm glad that I finally "timed" it right today and it's up nearly 10% in just 1 day. We'll see how it goes!

Smart choice. Lucky timing, so far.