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Coca Cola
Stock (KO) is up on Tuesday, following an upgrade from Morgan Stanley. The bank said Coca-Cola had one of the best sales growth potential of any consumer goods company, although the market has not yet recognized it.
The story back. Coke is up 3.7% since the beginning of the year and has risen by just over 18% in the last 12 months. The stock was one of the largest dividend payers in 2018, and the company increased its dividend this year for the 57th consecutive year.
Although investors sanctioned the title when Coke's outlook for the full year had disappointed in February (unlike
PepsiCo
of the
Post-results), the street was pleased with its report on the first quarter results. Of course, it is also possible that the company is exploiting CBD-based products in the rapidly growing cannabis market, and the fact that Warren Buffett
Berkshire Hathaway
(BRK.A) maintained its significant stake in Coke.
What's up. Morgan Stanley analyst Dara Mohsenian increased its rating on Coca-Cola and overweight compared to Equal Weight, and added $ 3 to its price goal of $ 55. He says Coca-Cola "offers significantly better growth prospects than consumer goods, with stronger pricing power, favorable strategy adjustments, strong volume growth and renewed emerging market trends" . Yet none of these catalysts are reflected now. The Coke multiple, which is lower than the long-term historical averages, he says. Coca-Cola is now its favorite consumer choice for mega-capsules.
Look to the front. The fact that Coca-Cola is lagging behind the broader market this year is a compelling entry point, Mohsenian writes. He raised his long-term growth forecast for the company to 5% instead of 4%, convinced of his ability to take advantage of pricing power, policy changes and growth abroad .
The increase in sales, combined with the easing of exchange rate difficulties, could give Coca-Cola an inflection point, rising from flat EPS growth in recent years to single-digit EPS growth in 2020 and beyond, he said, allowing his multiple to continue growing.
As Barron As noted in the company's latest earnings report, Coke has been able to deliver strong organic sales, with net growth across all regions. This is good news, as investors have wanted commodity companies to show that they are not on the path to growth but instead are offering products that consumers are still willing to buy, despite slippage in consumption compared to the traditional pillars of packaged foods.
If Coca-Cola could continue to record strong sales growth and regain higher earnings growth, it would greatly contribute to the extraction of equities, which have only increased about 22% since the peak of 40 USD reached early 2013.
Coca is up 2.2% to $ 49.12 in recent deals, while the Dow Jones Industrial Average gained 313.01 points, or 1.2%, to 25,638.00. Its dividend yield is 3.3%.
Write to Teresa Rivas at [email protected]
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