If you learn to think like Buffett, you could end up making better decisions with less stress.
Coca-Cola (KO -0.19%) is Warren Buffett's longest-held stock and one of his favorites. His holding company, Berkshire Hathaway, first bought shares of co*ke stock in 1988 and owns 400 million shares.
The big news revealed at the Berkshire Hathaway annual meeting last week was that it had sold 13% of its stake in Apple. While that sounds significant, and is, Apple remains the company's largest position by far, moving down from around 50% to 40% of the total portfolio. However, even though Buffett said Apple was a better business than Coca-Cola and American Express, his other longtime favorite, he has never sold a share of co*ke or American Express.
Let's see what he said about Coca-Cola and how that might influence your opinion of it as an investor.
A trio of forever stocks
Buffett often groups Coca-Cola and American Express together. He praises their dominance and how they've carved out exceptional niches in their industries, with strong moats and leadership. Recently, he's added Apple to create a trio of favorite stocks, or as he would say, businesses. He reiterated that he invests in businesses, not stocks, and explained that longtime partner Charlie Munger, who passed away last year, helped him shift his mindset to investigating a business instead of paying attention to the market.
"And that's sort of the story of why we own American Express, which is a wonderful business," he said. "We own Coca-Cola, which is a wonderful business, and we own Apple, which is an even better business."
He gave a further explanation for what it is about Coca-Cola that he finds so compelling:
No company hardly does business around the world like Coca-Cola. I mean, they are the preferred soft drink. You know, something maybe like 170 or 180 out of 200 countries. Those are rough approximations from a few years back, probably, but that degree of acceptance worldwide is, I think it's almost unmatched.
Coca-Cola's global acceptance means that it enjoys high sales and makes it very hard to beat. That's a moat that ensures its survival, and so long as the company keeps it strong, Coca-Cola should continue to perform well, keep up its dividend, and grow.
Where is Coca-Cola holding today?
Coca-Cola remains the largest beverage company in the world, with $46 billion in trailing-12-month revenue. It has successfully raised prices on many of its products because loyal customers are willing to spend for their favorite drink. That's the kind of brand Coca-Cola has developed over time. It has forged relationships with customers that lead to reliable sales, providing it with resilience during rough times. This is the quality that Buffett is describing.
Management recently made some changes to become an even stronger company. It removed half of its brands, about 200 in total. These were mostly local brands that accounted for less than 2% of volume and 1% of revenue. Consider that: Half of its brands were accounting for less 1% of sales. No wonder management decided to do away with them and refocus resources on better-performing brands.
This is what Buffett is talking about when he mentions that Coca-Cola is a global company. The stronger a company's global brand presence, the harder it is to topple from its perch. The more Coca-Cola focuses on its large, global, core brands, the stronger it becomes.
Invest like Buffett
Investors can talk about quarterly earnings and profitability and change their positions accordingly. Or you can think about the business the way Buffett does. "It's such a simple approach that it's almost deceptive," he said. "Most things, if you keep working harder and harder at it ... but investments, you don't really have to do that. You really have to have your mind set properly."
This is a useful paradigm when considering any stock. It can help investors think outside of the near-term box and focus on the long term, where investors can reap the real gains of successful investing.
American Express is an advertising partner of The Ascent, a Motley Fool company. Jennifer Saibil has positions in American Express. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
FAQs
Warren Buffett Coca-Cola Co
The investor owns 9.24% of the outstanding Coca-Cola stock. The first Coca-Cola trade was made in Q4 1998. Since then Warren Buffett bought shares ten more times and sold shares on eight occasions. The stake costed the investor $13.2 Billion, netting the investor a gain of 88% so far.
Is Coca-Cola stock undervalued or overvalued? ›
Is KO stock undervalued or overvalued? Compared to the current market price of 62.09 USD, Coca-Cola Co is Overvalued by 15%.
Is KO stock a buy? ›
KO Stock Forecast FAQ
Coca-Cola has a consensus rating of Strong Buy which is based on 12 buy ratings, 2 hold ratings and 0 sell ratings. The average price target for Coca-Cola is $67.85. This is based on 14 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
What do experts say about the Coca-Cola stock? ›
Fair Value Estimate for Coca-Cola
With its 3-star rating, we believe co*ke's stock is fairly valued compared with our long-term fair value estimate of $60 per share, which implies a 22 times multiple against our adjusted 2024 earnings estimate and a 2024 enterprise value/adjusted EBITDA multiple of 20 times.
What would happen if I invested $1000 in co*ke 10 years ago? ›
You would have more than doubled your money, with a total investment worth of $2,029.55. That's a 103% return, or a 7.23% annual rate of return. Interestingly, despite co*ke's dominance on the world stage, investing in co*ke's main rival, Pepsi, 10 years ago would have given you more pop for your buck.
Is Coca-Cola a good long-term investment? ›
The soda maker is still a great evergreen investment. Coca-Cola (KO -0.19%) is often considered a safe blue chip stock. It owns the world's top soda brand, it generates plenty of cash, and it pays consistent dividends.
Is Coca-Cola stock expected to rise? ›
The Coca-Cola Company Stock Forecast
The 12 analysts with 12-month price forecasts for KO stock have an average target of 68.33, with a low estimate of 60 and a high estimate of 74. The average target predicts an increase of 10.74% from the current stock price of 61.71.
How much will Coca-Cola stock be worth in 5 years? ›
Coca-Cola stock price stood at $61.71
According to the latest long-term forecast, Coca-Cola price will hit $65 by the middle of 2025 and then $70 by the middle of 2026. Coca-Cola will rise to $75 within the year of 2027, $85 in 2028, $100 in 2029, $110 in 2030 and $125 in 2033.
Is Coca-Cola struggling? ›
It's the largest beverage company in the world, with $46 billion in trailing-12-month revenue, and sales have steadily increased since bottoming out early in the pandemic; they're up almost 37% since the worst of that time.
How high will Coco stock go? ›
The average price target is $29.40 with a high forecast of $31.00 and a low forecast of $27.00.
Walt Disney has 28.25% upside potential, based on the analysts' average price target. Is DIS a Buy, Sell or Hold? Walt Disney has a consensus rating of Strong Buy which is based on 20 buy ratings, 5 hold ratings and 0 sell ratings.
What is the dividend on 100 shares of Coca-Cola? ›
The Coca-Cola Company's ( KO ) dividend yield is 3.09%, which means that for every $100 invested in the company's stock, investors would receive $3.09 in dividends per year. The Coca-Cola Company's payout ratio is 73.72% which means that 73.72% of the company's earnings are paid out as dividends.
Who owns most of Coca-Cola stock? ›
Coca-Cola (KO) Ownership Overview
Approximately 56.27% of the company's stock is owned by Institutional Investors, 5.84% is owned by Insiders and 37.89% is owned by Public Companies and Individual Investors. The ownership structure of Coca-Cola (KO) stock is a mix of institutional, retail and individual investors.
Why would someone invest in Coca-Cola? ›
Our geographic footprint creates a diverse balance. We have exposure to fast growing Emerging and Developing markets as well as a strong presence in the profitable and cash generative Established markets, and we benefit from the portfolio effect of exposure to different economic cycles.
Is Coca-Cola a good dividend stock? ›
The current 3.2% yield is healthy. But even more impressive, Coca-Cola has increased its annual dividend payout in 62 straight years. I see no reason to believe this trend won't continue. Investors who care most about generating income from their investment can do a lot worse than buy Coca-Cola shares.
Who owns the most percentage of Coca-Cola? ›
According to the latest TipRanks data, approximately 39.52% of the company's stock is held by institutional investors, 5.84% is held by insiders, and 37.94% is held by retail investors. Warren Buffett owns the most shares of Coca-Cola (KO).
Who is the biggest investor in Coca-Cola? ›
Largest shareholders include Berkshire Hathaway Inc, Vanguard Group Inc, BlackRock Inc., State Street Corp, VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, VFINX - Vanguard 500 Index Fund Investor Shares, Geode Capital Management, Llc, Morgan Stanley, Fmr Llc, and Charles Schwab Investment Management ...
How much buffet invested in Coca-Cola? ›
Warren Buffett bought more than $1 billion in shares of the Coca-Cola Company (KO) in 1988, an amount that was then equivalent to 6.2% of the company. The purchase made it the single largest position in Buffett's Berkshire Hathaway Inc. (BRK.
Does Warren Buffett own McDonald's? ›
2. McDonald's. It's important to clarify that McDonald's stock is not directly in Buffett's Berkshire Hathaway portfolio. Rather, its position is held in New England Asset Management (NEAM), a subsidiary of Berkshire Hathaway.
