Coca-Cola is the largest non-alcoholic beverage manufacturer and one of the most recognisable consumer brands in the world. The group's portfolio includes several products - with Coca-Cola, Fanta and Sprite being the most notable. In addition to soft drinks, it markets bottled water, fruit juice, sports drinks, as well as ready-to-drink teas and coffees.
The beverage giant continues to dominate the market with its industry leading distribution capability that reaches more than 200 countries worldwide. This includes both company-owned and independently operated bottling partners, wholesalers, and retailers.
Fundamental growth over the past few months has been quite impressive. The company recently posted 2Q23 results in which all key metrics beat expectations, as resilient demand across its product portfolio was supported by innovative and effective marketing strategies.
Technically, the price is forming a symmetrical triangle pattern, characterised by two converging trend lines that connect a series of sequential peaks and troughs (refer to the first chart).
This pattern represents a period of consolidation before an extended shift in the overall trend. Given that the stock is just entering an uptrend, this is seen as a bullish signal.
The stock appears to be building a base above its 200-day simple moving average (SMA) of ~$60.70. This implies that a support level is being formed, ahead of a further move upwards
Fading downside momentum according to the MACD indicator, as well as sidewards movement of the On-Balance Volume indicator, supports our bullish stance.
FNB has two ETNs, namely COETNQ (without currency exposure) and COETNC (with currency exposure) that can be used to replicate exposure to KO. These are both listed on the JSE.
Share Information
| Share code | KO US |
|---|---|
| Industry | Food, Beverage & Tobacco |
| Market Capital (USD) | 266.55 billion |
| One year total return | -0.31% |
| Return year-to-date | -1.62% |
| Current price (USD) | 61.64 |
| 52 weeek high (USD) | 65.47 |
| 52 week low (USD) | 54.02 |
| Financial year end | December |
| Closing paragraph | Various technical indicators suggest that the price is consolidating, ahead of an imminent break to the upside. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 2.48 | 2.74 | 2.94 | 3.02 |
| Growth (%) | 10.57 | 7.07 | 2.72 | |
| Dividend Per Share (USD) | 1.76 | 1.87 | 1.98 | 2.02 |
| Growth (%) | 6.41 | 5.81 | 1.99 | |
| Forward PE (times) | 22.48 | 20.99 | 20.44 | |
| Forward Dividend Yield (%) | 2.91 | 3.12 | 3.28 | |
| Closing paragraph | Analysts are bullish on growth ahead, supported by easing supply-chain pressures as well as an overall improvement in economic conditions. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
APA - Profit Take (Close the Position) |
FCX - BUY (Continue to hold) |
IEX - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 37.88 | 39.71 | 212.62 |
| Current | 41.66 | 43.05 | 222.06 |
| Movement | 10% | 8.4% | 4.4% |
| Summary text | We closed the position early to reduce overall portfolio exposure. |
Price symmetry remains of interest. The stock is trading above its 200-day simple moving average. Upside momentum provides further support.
Our profit target is $47 with a trailing stop-loss at $39.85. Exit the position around 18 October 2023. |
The price remains above key support l. Continues to test the 200-day simple moving average. Upside momentum is still supportive.
Our profit target is $240 with a trailing stop-loss of $212. Exit the position around 20 October 2023. |
| Share Name and position |
VOE - Buy (Continue to hold) |
FOXF - Buy (Continue to hold) |
SBUX - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 137.42 | 105.69 | 102.92 |
| Current | 142.60 | 106.29 | 102.33 |
| Movement | 3.8% | 0.6% | -0.6% |
| Summary text |
The ETF price remains in a symmetrical triangle pattern. Trade continues above the 200-day simple moving average. Upside momentum has halted, however, and this is a slight concern.
Our profit target is $148 with a trailing stop-loss of $137.30. Exit the position around 15 September 2023. |
A price making higher highs and higher lows remains of interest. The stock is testing its 200-day and -week simple moving averages. Upside momentum has halted, however, and this is a slight concern.
Our profit target is $126 with a trailing stop-loss of $98. Exit the position around 6 October 2023. |
Remains within a symmetrical triangle pattern. Trading continues to test the 200-day simple moving average. Fading downside momentum supports the bullish trend.
Our profit target is $114 with a trailing stop-loss of $99. Exit the position around 29 November 2023. |
