I remember someone once telling me that they'll know that Coca-Cola
Regardless, I've been wondering if Coke truly has run its course as far as conquering the world, and if it's an investment I would make today. I held Coke from 1995 to 1998, enjoying a 100% investment return, before presciently selling out. The stock peaked at $88 in 1998, has bounced off of a low of $40 four different times since 2003, and sits at $56 today.
Initially, my premise for this article was that Coke doesn't have any further to go, it hasn't performed that well, and probably won't going forward. But I actually discovered exactly the opposite.
As far as the flagship brand goes, Coke literally reaches into the far corners of the globe at this point. When flipping through a nonfiction book about Africa a few weeks ago, I noticed that the author mentioned coaxing a warm Coke from a beat-up vending machine deep in the heart of Africa. The gods must be crazy, indeed.
If brown sugar-water were all that Coke sold, then I'd stop writing here. However, the company owns and licenses more than 500 drink brands, and that's why I don't think investors can ever truly count Coke out. As long as people drink fluids, and Coke finds a way to brand even a small number of those fluids, the company will be around for a long, long time. And its brands don't even have to be sodas. After all, of the 54 billion beverage servings consumed worldwide every day, 1.6 billion bear a trademark owned by or licensed to Coca-Cola.
So that means there's still plenty of new markets to split with PepsiCo
In Coke, I see a company whose earnings have steadily grown over the past decade, although this hasn't always been strictly a result of organic growth. It has $9 billion in cash and $11 billion in debt, although the debt is easily serviced by the company's nine-figure cash flow. Net profit margins are an astounding 20% over the past four quarters, which allows it to pay that sugary 2.9% dividend.
Coke isn't going anywhere, but its stock sure has. Its five-year performance has beaten the market handily: A 56% overall return vs. the S&P 500's -6%. So it seems that Coke remains well-positioned, and I think it would be a fine addition to a long-term portfolio.
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Rick Steier does not own shares in any company mentioned. Coca-Cola is a Motley Fool Inside Value recommendation. Hansen Natural is a Rule Breakers choice. Coca-Cola and PepsiCo are Income Investor recommendations. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy pays its dividends in sugar water.