# Coke (NYSE:KO)



## Ethan

A long-time favourite of Warren Buffett, Coke has increased their dividend every year for the last 49 years. Currently priced competitively with a trailing PE of 12.90 (vs. 18.87 for Pepsi) with sufficient earnings to cover the dividend and fund future growth.

My concerns relate more to the American dollar than anything to do with the Coca-Cola company.

Any thoughts?


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## Homerhomer

Globe investor has trailing PE of 18.70, yahoo finance 12.90 which seems inexpensive, but I doubt it's correct.
Coke imo is a great company, a global leader with global presence and big chunk of revenues coming from outside of USA, which in itself creates a natural hedge against currency weakness.

Currently imo overvalued at these levels, 10 year chart shows the trading range and right now it's right at the top, dividend yield of 2.8% is not that attractive, historically the average high hield is about 3.3%, much better entry point.


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## Toronto.gal

The P/E is closer to 19 I believe.

The stock is not cheap, but it is still reasonable. More than that, and one of the reasons why I own it, is because of the 'duopoly' [I like that word] it has with PEP.  

To add to what homerhomer already said, everything I read indicates that KO is expanding in big international & emerging markets such as Brazil, China, India, Mexico, Russia, Turkey, etc.; the potential growth & numbers are hard to ignore. As for the weak currency, it actually helps sales when 2/3 of their revenue come from outside. 

" The soft drinks maker is planning to more than double its number of bottling plants in China over the coming decade as part of the group's aim to triple the size of its sales to the country's rapidly emerging middle class. Coke derives more than three-quarters of its revenue from international markets, and is therefore able to offset falling sales in the United States with strong growth in emerging markets like India, China and Brazil. Coca-Cola executives say they expect 60 per cent of the new growth to come from China, India and other emerging markets, with only 15 per cent from developed markets."


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## Cal

Ethan said:


> My concerns relate more to the American dollar than anything to do with the Coca-Cola company.


How so?

I mean it is sold everywhere in retail. It is sold everywhere in McD's as well. Even Bin Laden, who is as anti American as it gets had a few cases.

On one hand I feel it is priced a little high for my liking, on the other hand how can you not buy such a great company at any point.


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## Homerhomer

Cal said:


> on the other hand how can you not buy such a great company at any point.


Not sure I agree, after all the all time high is around $85 and if purchased by a Canadian when our buck was much weaker it really wouldn't have made any money in the last 15 years. I think it's one where you have to pick your spots, which is not to say that it may have been forming a base for the last 15 years and it's now ready to move up for good ;-)


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## Ethan

Cal said:


> How so?


Because I'm bearish on the US dollar. A declining US dollar will help Coke's export sales, however when I sell I will be converting the funds to Canadian dollars. If the American dollar depreciates faster than the stock price appreciates, I will lose money.


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## gibor365

Most analysts prefer PEP over KO.
As per high price....I thought the same 3 months ago, almost bought PEP (my order got rejected by TDW for invalid reason and I bought something different )...and in those 3 months PEP gained 10%! (much better than KO)


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## Jungle

Pepsi also owns Quaker, Tostidos and a bunch of other well branded companies too.


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## Toronto.gal

Ethan said:


> Because I'm bearish on the US dollar.


Are you then saying that you're afraid to buy any US company? 

*gibor:* you're right, analysts favor PEP and I guess it has a lot to do with the higher yield, however, PEP's debt is much higher than KO, but both are great long term holds, why not own the duopoly?

*Jungle:* though their food/snack business is a good diversification, it is also the very reason why the stock could suffer according to article below and it makes sense given that food prices have reached a record high and hurting other companies like MCD/KFT for example [cute avatar btw]. 

http://seekingalpha.com/article/262639-dividend-investors-should-favor-pepsi-over-coke


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## Ethan

Toronto.gal said:


> Are you then saying that you're afraid to buy any US company?


Yes. I have 11% of my portfolio in US stocks, I'm not sure if I should be adding more or not. If I really like an American company I'll buy it, but I realize if I keep my investments Canadian I largely eliminate foreign currency risk.

Coke might be a company I consider worth buying due to their long term growth and stability.


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## Financial Cents

I bought a few shares of KO over a year ago @ 55. I wish the price was lower as well since my DRIPs are not buying this guy any cheaper of late. Oh well. 

I think either PEP or KO are great companies. Either one is a great addition to an RRSP.


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## Toronto.gal

Speaking of which:

*Coke to pump $US2bn into bottling up Chinese market*

http://www.theaustralian.com.au/bus...p-chinese-market/story-e6frg91o-1226067742201


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## Sampson

Ethan said:


> but I realize if I keep my investments Canadian I largely eliminate foreign currency risk.


What is your investment time horizon? If you are in your accumulation phase, over a good 15-20 years, the currency risk will be minimized.

I accept currency risk, because I also acknowledge that while Canadian markets have done very well over the pas 10-15 years, it won't always be that way.

Just as you don't want too much exposure to the USD, I don't want too much exposure the the CAD, my salary and hence the majority of my monies are already exposed the CAD.


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## Cal

Sampson said:


> I accept currency risk, because I also acknowledge that while Canadian markets have done very well over the pas 10-15 years, it won't always be that way.
> 
> Just as you don't want too much exposure to the USD, I don't want too much exposure the the CAD, my salary and hence the majority of my monies are already exposed the CAD.


Couldn't agree w you more. I think too many feel as we are commodity rich anything CDN will always be in demand.


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## Ethan

Sampson said:


> What is your investment time horizon? If you are in your accumulation phase, over a good 15-20 years, the currency risk will be minimized.


I'm 26 and the purchase would be within my RRSP; I won't be needing the money anytime soon. I'm in the process of transferring money from my former broker to a self-directed account so I have ~2 weeks to make my decision.



> I accept currency risk, because I also acknowledge that while Canadian markets have done very well over the pas 10-15 years, it won't always be that way.
> 
> Just as you don't want too much exposure to the USD, I don't want too much exposure the the CAD, my salary and hence the majority of my monies are already exposed the CAD.


I suppose. While my earnings are all Canadian, so is the majority of my spending as well as the majority of my future spending, so I'm comfortable being all Canadian. If I expected to work abroad or owned foreign vacation or rental property then I would be more concerned about the majority of my investments being Canadian.


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## Financial Cents

Currency risk is not a big risk over a long time frame. If you're thinking of buying KO, I wouldn't think this is something you'd want to sell in a few years. Hold forever and let the dividends flow in to buy more KO shares


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## Cal

Share split in Aug.: http://money.msn.com/business-news/article.aspx?feed=AP&date=20120710&id=15313905


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## KaeJS

I might be in for 100.

Anyone else buying before the split?


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## Jungle

Should be priced in, no? There was a jump passing $70 over the last few months.. it took coke a long time to do that.


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## Kaitlyn

Given the share split, I am assuming there is no difference between buying before or after the split?

I am in for the long-er time, so if I go after the split I can get more shares and the return would be better...

*Edit:* I can't believe I just said the above... before or after from amount of shares I could buy... no difference, heh

However, is there generally a better time to buy? Is there normally a bump or dip after a split?


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## Young&Ambitious

The return would be the same before/after split.


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## Nick1357

Semi-related question:

When I look at the charts of stocks that have split in the past I don't see the sudden drop in share price (i.e. from 70 to 35). I assume they must just normalize/smooth out the chart to reflect the current share price correct?

Also, For what it's worth, I have read articles suggesting that shares often get a bit of a bump after a stock split perhaps due to psychological factors with the lower share price and the suggestion of further growth, but I have no idea how true that is.


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## Jungle

^ I've heard of that too. But earning don't go up when stock splits, so company gets more expensive.


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## HaroldCrump

Nick1357 said:


> When I look at the charts of stocks that have split in the past I don't see the sudden drop in share price (i.e. from 70 to 35). I assume they must just normalize/smooth out the chart to reflect the current share price correct?


Yes, most price charts that you see on Google, Yahoo, MSN, etc. are already split adjusted.


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## PMREdmonton

In the long run stock splits will not affect valuation at all - you'll just have twice as many shares at half the price. It also won't affect P/E, P/B or P/S ratios as the P will be half but earnings per share, book value per share and revenues per share will also be cut in half due to there being twice as many shares kicking around.

It is basically a non-event but the company prefers their stock to trade in a certain monetary range. 

As an investor I kind of like shares around 20-75 dollars because options are more reasonable than for high share prices while the price is still high enough to avoid excessive trading fees.


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## indexxx

PMREdmonton said:


> In the long run stock splits will not affect valuation at all - you'll just have twice as many shares at half the price. It also won't affect P/E, P/B or P/S ratios as the P will be half but earnings per share, book value per share and revenues per share will also be cut in half due to there being twice as many shares kicking around.
> 
> It is basically a non-event but the company prefers their stock to trade in a certain monetary range.
> 
> As an investor I kind of like shares around 20-75 dollars because options are more reasonable than for high share prices while the price is still high enough to avoid excessive trading fees.


The dividend per share is cut in half also.

Just my two cents. (one cent after the split...)


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## Antlese

One benefit to the shares splitting and the price going to around $40 is my synthetic drip will beable to purchase a share now when i receive my quarterly dividend. I dont own enough KO to drip the shares at the current price.


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## Financial Cents

I hear ya Antlese. I was in a similar position a couple of years ago. With the stock price chopped in half, and dividends, I now own enough shares to DRIP synthetically and this guy will be on autopilot in my portfolio for the next 30+ years.


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## Cal

When a stock splits, the dividend payout splits as well. It is all relative to the number of stocks on the open market.

Nick1357...I have read somewhere that the average stock plit will result in a bump of about 8% in the share price, in and around the time of the split, which as mentioned will temporarily make the stock a little overpriced. Assuming one wanted to buy it at that time.


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## doctrine

A stock split has nil actual impact, but the fact remains that companies doing stock splits are doing it because they're doing well, and management feels they will continue to do so. Therefore, it is a great indication that a company is doing very well and so purchasing a company that is splitting may result in both short and long term gains.


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## sam

thinking of investing in KO , is this a good buy @ 38 ? what do you guys think ?


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## peterk

I'm sure there could be some miniscule price bump because of stock splits due to the greater number of small retail investors getting access to an expensive stock (think BRK.B splitting 50:1) or increased buying from options traders or people wanting a minimum amount of shares in their portfolio.

Even if that's the case though, all those factors are priced into the stock by the big players on wall street within seconds of the announcement of the split (not the actual date of the split). So it's not a concern for us little guys


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## Gotcha

sam said:


> thinking of investing in KO , is this a good buy @ 38 ? what do you guys think ?


I think it's always a good buy. I got some at 65$ before the split and will add some more. KO will be here in 30 years when I retire.


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## Sampson

i had to double take when I saw $38, forgot about the split, and I thought I was down ALOT.


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## sam

why KO is down for the last months, more than 7%?


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## Siciliano698

Hi, is it worth it investing in this stock with a tfsa and with drip setup for this stock, are there any taxes to be paid for dividends etc..


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## Navigate Sensibly

sam said:


> why KO is down for the last months, more than 7%?


No clue. Maybe it went too high for its own good. :rolleyes2:

I would like to purchase it as well.


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## Homerhomer

Siciliano698 said:


> Hi, is it worth it investing in this stock with a tfsa and with drip setup for this stock, are there any taxes to be paid for dividends etc..


There will be 15% witholding tax with no tax credit in TFSA on any US dividends, you should invest in US stocks inside rrsp to avoid this.


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## Toronto.gal

Sampson said:


> i had to double take when I saw $38, forgot about the split, and I thought I was down ALOT.


LOL; your uncharacteristic panic [if that's what it was], made me laugh. :biggrin:

The disbursement just took place on Aug.16th, so forgetting was no surprise. But when would KO go down that much anyway? It's not exactly GMCR. :wink:


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## Ethan

Coke raised their dividend today by 10%. I think the dividend is not only sustainable, but has room to increase. I calculated their FY2012 free cash flows (in millions) as:

10,645 - Operating cash flows
1,080 - add back reduction in working capital
(2,780) - expenditures on PPE
8,945

Coke's market cap is 18.8x FCF, $168,390 million. 2012 dividends were $4,595 million, or 51.4% of free cash flows.

I have a small, but growing position, in my RRSP. Similar to Walmart, I view Coke as a company with a very strong brand that will grow its dividend by double digits annually for the foreseeable future.


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## Jungle

I will be buying coke in the next couple of weeks.


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## FrugalTrader

I started a position in KO about a week ago.


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## Celso

This is one i´d like to add, and the split makes it more accessible for me. May be this one will a birthday present to myself. :biggrin:


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## Toronto.gal

Ethan said:


> Coke raised their dividend today by 10%. I think the dividend is not only sustainable, but has room to increase. I calculated their FY2012 free cash flows (in millions) as:
> 
> 10,645 - Operating cash flows
> 1,080 - add back reduction in working capital
> (2,780) - expenditures on PPE
> 8,945
> 
> Coke's market cap is 18.8x FCF, $168,390 million. 2012 dividends were $4,595 million, or 51.4% of free cash flows.
> 
> I have a small, but growing position, in my RRSP. Similar to Walmart, I view Coke as a company with a very strong brand that will grow its dividend by double digits annually for the foreseeable future.


Thanks for the calculations.

A buy/hold/forget stock I purchased back in 2010.


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## maxandrelax

I will buy only on a good pullback. Too expensive. Way above historical P/E. Same with MCD and JNJ. For yankee stock taking a serious look at YUM right now.


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## jcgd

Yeah, I agree that Coke is a little on the pricey end right now. I'm don't see any reason to buy right now.


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## thenegotiator

FrugalTrader said:


> I started a position in KO about a week ago.


frugal.
why KO if u do not mind answering?
i think i know why but just want some confirmation on my thoughts.
cheers


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## FrugalTrader

I'm building my US dividend portfolio, and KO is one of the names that I want. Seems like a reasonable valuation and dividend. Will be adding more if it dips.


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## My Own Advisor

Got a few hundred shares in my LIRA. Coke is it  Great news.


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## The Dude

Thursday, Feb. 21, 2013 / Updated: Thursday, Feb. 21, 2013 02:29 PM

The Board of Directors of The Coca-Cola Company Increases Annual Dividend by 10 Percent


and the stock went down that day ? I don't get it


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## doctrine

That's not uncommon. Good companies often drop after earnings reports. Lots of people will buy in anticipation of a great quarter, then immediately sell regardless of the results.


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## gibor365

KO is a great stock, but PEP still has higher yield (even after greatly outperforming KO last year) and upcoming div increase (hopefully not less than KO's)


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## donald

Ko had a big spike yesterday.....Some interesting news reep-They are out of thiland(bangk)---59 years and the contract is up(not renewed)----not sure if it's noteworthy but it is a large region and growing---double the pop of canada.Not the greatest news for pep i would assume for their global growth.


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## warp

I have wanted to buy KO for a few years but always found it too expensive, valuation-wise.

I did buy Pepsi last year instead, and it has done well. 

I have Coke on my watchlist, and will buy if it drops back a bit. It had a nice run up the last few days, after the drop following earnings report though.

I often wonder if Coke isn't like Enbridge...always seems too expensive, yet continues to go up steadily.
( and I missed both because of the valuations seeming rich)


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## jcgd

donald said:


> Ko had a big spike yesterday.....Some interesting news reep-They are out of thiland(bangk)---59 years and the contract is up(not renewed)----not sure if it's noteworthy but it is a large region and growing---double the pop of canada.Not the greatest news for pep i would assume for their global growth.


Doesn't help that a competitor took something like 19% market share in a matter of months. I believe the competitor has all the the distribution as well.


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## gibor365

warp said:


> I have wanted to buy KO for a few years but always found it too expensive, valuation-wise.
> 
> I did buy Pepsi last year instead, and it has done well.
> 
> I have Coke on my watchlist, and will buy if it drops back a bit. It had a nice run up the last few days, after the drop following earnings report though.
> 
> I often wonder if Coke isn't like Enbridge...always seems too expensive, yet continues to go up steadily.
> ( and I missed both because of the valuations seeming rich)


Exactly my situation


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## donald

Hey gibor-Ko is in the region so my thinking is that is a + for ko.The reviews on the new bottler/competitor is not good(according to news feeds)So one would/could think now that pep is out of the way ko will chip away with ease for market share.(soft drinks are one item that is showen that people generally do not price shop ieay for the comfort of the knowen brand)I'm sure ko is thinking this is there green light.....I'm sure(can't recall the company name)is going to be feeling foot steps.

Pep does have the superior snack line though between Ko in the global market.
Hard to find a reason why owning ko would be a bad play,it's got so many things in it's favour---hard to argue with warren B---think one will likely always pay up to get in.(ive held it for a yr and a half and im up teen double digits(id have to look) & it was expensive back than also)


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## donald

What the hell man.......How do these smiles keep popping up.Lol.....this format/text is messing with me.


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## gibor365

donald, if you look at 10 years returns KO vs PEP, they practically identical.
5 yesrs return KO otperformed PEP, but 1 year return PEP 20% and KO - 11%... imo PEP more diversified (not only drinks) and this is plus.
Nevertheless , if KO drops to have yield more tan 3% probably I'll initiate a position


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## HaroldCrump

donald said:


> What the hell man.......How do these smiles keep popping up.Lol.....this format/text is messing with me.


Select the _Disable smilies in text_ checkbox before you post.
Like this


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## thenegotiator

FrugalTrader said:


> I'm building my US dividend portfolio, and KO is one of the names that I want. Seems like a reasonable valuation and dividend. Will be adding more if it dips.


with one sentence u just answered all what i thought.
specially the part that u mention " ur US dividend portfolio"
thks.


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## Toronto.gal

gibor said:


> Exactly my situation


For those who have contemplated this fantastic stock for 'years', I wonder where you guys were in 2009/2010?

*Gibor*, I know u entered the stock market after I did [2010/11?]. At any rate, I'm surprised you don't have this stock in ur portfolio yet, especially considering the fact that it has been paying dividends since the late 1800's. :biggrin:

I guess you guys missed KO's '2020 Vision' announced back in Nov./09. The key message had been that of doubling revenue, and so far, they are doing a good job! 

http://assets.coca-colacompany.com/22/b7/ba47681f420fbe7528bc43e3a118/2020_vision.pdf

*Great video: *
http://www.youtube.com/watch?v=LerdMmWjU_E


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## gibor365

T.Gal, as i mentioned before about year ago I was comparing KO vs PEP and decided to go with PEP. However, it soen't mean I will ignore KO, it's possible bu yof yield going up to 3+%


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## gibor365

If tomorrow KO drops like today , I may initiate position  yield is already 2.97%


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## humble_pie

this might work:

B KO jan 2015 30 @ 7.90-8.00
S KO jan 2014 40 @ .98
net cost 7.00

10 of these would cost $7000 while controlling 1000 shares for 2 years.

there's no dividend; but US dividends are so dodgy for us canadians anyhow. Capital gains are better.

the maximum gain possible in this initial phase would be 42%; the diagonal would have to be adjusted later in 2013.

if markets tank, only 7k would be at risk, not 38k.


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## warp

Toronto.gal said:


> For those who have contemplated this fantastic stock for 'years', I wonder where you guys were in 2009/2010?
> 
> *Gibor*, I know u entered the stock market after I did [2010/11?]. At any rate, I'm surprised you don't have this stock in ur portfolio yet, especially considering the fact that it has been paying dividends since the late 1800's. :biggrin:
> 
> I guess you guys missed KO's '2020 Vision' announced back in Nov./09. The key message had been that of doubling revenue, and so far, they are doing a good job!
> 
> http://assets.coca-colacompany.com/22/b7/ba47681f420fbe7528bc43e3a118/2020_vision.pdf
> 
> *Great video: *
> http://www.youtube.com/watch?v=LerdMmWjU_E



TGAL:

You are right...KO was a great buy back then, like so many other great value companies.

With enough nerve, one could have bought any number of wonderful Canadian, US, and global companies, all with great yields due to their low prices, and live happily ever after.

As well , one would have had to reset his or her asset allocation aside and buy equities only.

I did very well with individual bonds for a few years, but now, that cash is almost impossible to re-deploy into fixed income.

I made many buys back then, but KO was not among them, much to my dismay.

I do, however, remind myself that you can't buy everything.


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## Toronto.gal

warp said:


> I do, however, remind myself that you can't buy everything.


Indeed warp! There had been too many sales, but not enough cash for all.

I was just teasing as you indicated that the only reason you had not bought, had been because you had found it 'too expensive'.

To be honest, there were certain stocks back then, that I had wanted to buy regardless of valuation, and KO had been among them because I had wanted the world's most powerful brands. My reasoning had been that I could not go wrong with them in the long-term, and that affordability would be more difficult at a later time, so I got the big ones out of the way right away, and today I concentrate on the smaller ones.

Btw, welcome back to the forum!


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## warp

TGAL:
Your Quote

"To be honest, there were certain stocks back then, that I had wanted to buy regardless of valuation, and KO had been among them because I had wanted the world's most powerful brands."

is absolutely spot-on, and great, ( and even obvious), thinking.
Well done.........I wish I had of seen those thoughts from you back in 2008-9.


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## gibor365

warp said:


> TGAL:
> ...I wish I had of seen those thoughts from you back in 2008-9.


Back than majority of people were hiding cash under matrass 

I didn't have discount brokerage account then, but I doubt I'd have nerves to buy any stock....


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## Toronto.gal

In 08, I wasn't even following, nor had much interest in the market. :rolleyes2:

I started buying stocks in late 2009. My portfolio today, with the identical stocks, would look way different, IF I had started buying just 6 months earlier. I guess we could all say the same, at least those who had picked up the powerful & even the semi-powerful brands. 

*warp:* yes, the 'obvious', or what I like to call no-brainers, are often missed by all.


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## namelessone

As a small investor, it's not wise to invest in big cap stocks as this or the like of IBM,AAPL. Why racing toward law of deminishing return when we just got started? Solid small/mid caps give great return.


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## Toronto.gal

Sure the right small-cap stocks are great investments/bigger beneficiaries of M&As/provide greater potential for margin expansion, etc., etc., but the discussion had been about *recession investment strategies*, ie: discussing 2009 and not 2013.

A stock that was $10 in 2009, that is now $20, is still affordable to small investors, but not so much the ones you mentioned, that were $100/$200, but that today they are $200+ & $400+ respectively.


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## Homerhomer

namelessone said:


> As a small investor, it's not wise to invest in big cap stocks as this or the like of IBM,AAPL. Why racing toward law of deminishing return when we just got started? Solid small/mid caps give great return.


It would be a good advice if one was wise enough to avoid all the dogs and just got the winners, however since this is not a fairytale for many of us it is wise to avoid risks associated with small to mid caps by not touching them at all or allocating only small portion of the portfolio to them.

Russell 2000 has outperformed Dow Jones by about 20% in the last 5 years, nothing to write home about in this context, it hasn't outperformed in the last two years, add the dividens and dow jones is probably a better investment, and less risky for sure.


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## Toronto.gal

Homerhomer said:


> wise to avoid risks associated with small to mid caps by not touching them at all or allocating only small portion of the portfolio to them.


I wouldn't agree with avoiding them 'all', but definitely small cap stocks are far riskier [especially in bear markets] than the mid, and especially the large & much higher quality cap stocks with the kind of stability & long business history, such as KO, that pay a dividend/increase them regularly, etc. Small cap stocks, however, do have growth & other advantages.

As mentioned upthread, my investment strategy in 09 had a purpose, ie: to buy the bigger/higher-quality companies first while affordable, and move to the smaller ones later, and though there are 'dogs' among the large caps during a recession as well, the risk is still less. I was not suggesting buying the large companies at a 52 week high, LOL.

*The Small-Cap Stock Trap*
http://online.wsj.com/article/SB10001424127887323864304578316461878863912.html

Another thing that _namelessone,_ you should keep in mind, is that KO is the most powerful brand in the world of beverage/a defensive non-cyclical consumer staple/sold in over 200 countries/close to 2 billion in global daily servings, etc, etc. 

Have you ever visited KO's website? It's loaded with information! 

Take a little tour!
http://www.coca-colacompany.com/our-company/


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## My Own Advisor

I'm with you T.gal..."As mentioned upthread, my investment strategy in 09 had a purpose, ie: to buy the bigger/higher-quality companies first while affordable, and move to the smaller ones later, and though there are 'dogs' among the large caps during a recession as well, the risk is still less."

I'll explore more with smaller cap divi. stocks once I have a healthy basket of about 30-35 big blue-chips DRIPping every quarter.


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## Toronto.gal

My Own Advisor said:


> healthy basket of about 30-35 big blue-chips DRIPping every quarter.


I'm actually trying to reduce mine to about 20-25, and yes, DRIPping every Q! :encouragement:


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## My Own Advisor

Really? Too many (stocks) to follow?

If so, I can see that. I index everything else partly because I can't be bothered following any more than what I've got.


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## jcgd

MOA, what all do you do for maintenance on those stocks? Do you read quarterly reports, annuals, webcasts, etc.? I only have around 12 stocks but I read almost every report and listen to webcasts and such, but not for every company. There are some that I trust and only check in every once in a while, but most of my stocks I don't trust enough not to check in on them.

I can't imagine the workload on those people who have many companies, 40 or 50 or 100 even.


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## namelessone

TG you missed my point. I am not saying KO is not a great company. I am saying small caps have bigger potential to achieve better return than big caps stocks. That's all. Our world has limitation. A company can't grow forever. It'll slow down once reaching a certain size.
I used to own solid stocks liek ADP, IBM, AXP etc but sold them all. and concentrate on small caps around single digit B. The biggest caps I own are around 50B. 

There're great companies in small caps.. If you can spot them, they give much satisfactory return!

Small cap example:
SJ.To buy and hold: It's upped 30 times within the past 10 years. I've owned it for only a few years. It doubled last year.If you bought it in 2009, now it's a 6 bagger. Is it currently over valued? I don't think so. I say it's fairly valued.

Small doesn't mean it's riskier.Risk comes from not knowing what one's doing. It's like driving a car without driving license. Investing without knowing what investing is, what business is all about, that's risky. 







Toronto.gal said:


> I wouldn't agree with avoiding them 'all', but definitely small cap stocks are far riskier [especially in bear markets] than the mid, and especially the large & much higher quality cap stocks with the kind of stability & long business history, such as KO, that pay a dividend/increase them regularly, etc. Small cap stocks, however, do have growth & other advantages.
> 
> As mentioned upthread, my investment strategy in 09 had a purpose, ie: to buy the bigger/higher-quality companies first while affordable, and move to the smaller ones later, and though there are 'dogs' among the large caps during a recession as well, the risk is still less. I was not suggesting buying the large companies at a 52 week high, LOL.
> 
> *The Small-Cap Stock Trap*
> http://online.wsj.com/article/SB10001424127887323864304578316461878863912.html
> 
> Another thing that _namelessone,_ you should keep in mind, is that KO is the most powerful brand in the world of beverage/a defensive non-cyclical consumer staple/sold in over 200 countries/close to 2 billion in global daily servings, etc, etc.
> 
> Have you ever visited KO's website? It's loaded with information!
> 
> Take a little tour!
> http://www.coca-colacompany.com/our-company/


----------



## doctrine

> A company can't grow forever. It'll slow down once reaching a certain size.


Although I also like small caps, I somewhat disagree. The total size of the largest companies in the world continues to grow larger, and at a good clip. It's not easy to get a small cap that will double or triple in a few years. Although, you only need to find a couple to make a big difference in your returns.


----------



## Toronto.gal

namelessone said:


> 1. TG you missed my point. I am not saying KO is not a great company.
> 2. It's like driving a car without driving license.
> 3. Investing without knowing what investing is, what business is all about, that's risky.


*1.* No, I did not misunderstand you & I didn't disagree in full, but I don't think you understood my point.

*2.* And unexpected situations cause devastating results, no matter how good a driver one might be.

*3.* Generally speaking, evaluating small cap companies is not as easy.

Anyway, MHO is that large-cap stocks do provide more stability & less volatility. I don't view the historical data & long-term success as a disadvantage, on the contrary!

All caps have a role in a well diversified portfolio, and that is JMHO!


----------



## warp

Actually, there are studies that show "SMALL CAP VALUE" performs better than anything coming OUT of a recession, like the terrible one we had in 2008-9.

If you think about it, basically that's a strategy of buying the stocks nobody wants at the time.
Small cap value...which you can buy through many low fee ETF's...did very well if bought in 2008-9, over the next few years to today. In fact small cap value tends to outperform over longer time frames, period.

As an afterthought.....individual comapny stocks or market ETF's should be bought when nobody likes them or wants them...when they are unloved, they are cheap, and tend to do well if held for a few years.
Easy to say, but tough to do, though......to go against the herd, and buy when eveyone is selling


----------



## doctrine

There was some unbelieveable value in Canadian small caps in 2008-09. Most of those have now been realized but I can't wait for the next big correction.


----------



## Jungle

Finally grabbed some coke just before earnings. Look forward to owning this company for a very long time.


----------



## sylyconvalley

FrugalTrader said:


> I'm building my US dividend portfolio, and KO is one of the names that I want. Seems like a reasonable valuation and dividend. Will be adding more if it dips.


time to add:rolleyes2:
it is getting really cheap


----------



## fatcat

79 cents away from a 3% dividend .. their 5-year average divvy yield is 2.90

a few of the dividend staples are trending down

the question is, to buy now or wait to see what happens in the next couple of months which could be rough
the fed on the 18th will be a very big meeting and who knows how the market will react ?


----------



## sylyconvalley

^
add lil by lil fatcat.
they are pricing this kinda stuff aggressively IMO.
this is a buy and forget stock.
even i am getting interested and i have one core stock in my portfolio which I am thinking of getting rid off.... i am stubborn with what i am holding though.


----------



## My Own Advisor

KO is my biggest U.S. holding. Next largest U.S. holding is VTI. I never plan on selling either.


----------



## sylyconvalley

VTI as in the ETF?


----------



## Toronto.gal

Yes, as MOA said US holding, hence it's definitely not Valdor Technology Int., and also because he would never invest in a penny stock [he told us so].


----------



## fatcat

yield at 2.9419
this is on my list but i have been waiting and waiting for an entry
do the syrians drink coke ?


----------



## sylyconvalley

fatcat said:


> yield at 2.9419
> this is on my list but i have been waiting and waiting for an entry
> do the syrians drink coke ?


i am sure that if they did not they will now.
cheers


----------



## My Own Advisor

Toronto.gal said:


> Yes, as MOA said US holding, hence it's definitely not Valdor Technology Int., and also because he would never invest in a penny stock [he told us so].


Ha. Well, no penny stocks anymore! 

Yes, VTI the ETF. I would like to own more units, enough to buy/DRIP 2 or 3 units every quarter would be nice.


----------



## sylyconvalley

^
well I am in
and i like the chart.
we will talk about it in 10 years right?
will add IF it goes lower.

like i said my first real divvy buy and forget stock:encouragement:


----------



## Ethan

fatcat said:


> yield at 2.9419
> this is on my list but i have been waiting and waiting for an entry
> *do the syrians drink coke *?


This made me laugh.

I'm still holding my shares in Coke, and plan to for many more decades.


----------



## Killer Z

I own a small slice through VTI, but really debating hard these past few weeks on whether I should buy some KO. It's currently trading at $40ish/share .......maybe I should just start with a smaller position and add if the price pulls back?


----------



## MrMatt

*KO ? Coke*

I've been looking, it seems they're priced okay, but not great.

But I'm curious what valuation people see?

What about the Green Mountain partnership?


----------



## GoldStone

*Total return with dividends reinvested*

Jan 1993 - Feb 2014 (21 years)

SPY: 9.05%
KO: 8.37%

I think the gap of underperformance will widen going forward. This is not exactly the Golden Age for sugary caffeinated water. I don't see how the next 21 years can be better than the last 21 years.


----------



## gibor365

GoldStone said:


> *Total return with dividends reinvested*
> 
> Jan 1993 - Feb 2014 (21 years)
> 
> SPY: 9.05%
> KO: 8.37%


Just wondering ....what return PEP has? 
How you can know return with dividend reinvested?
I checked 10 year return on google, both have identical return 61.70 vs 61.07, but considering that KO has at least double dividends of SPY, KO should've perform much better


----------



## GoldStone

gibor said:


> How you can know return with dividend reinvested?


http://longrundata.com/

SPY data starts on January 29, 1993.


----------



## fatcat

gibor said:


> Just wondering ....what return PEP has?
> How you can know return with dividend reinvested?
> I checked 10 year return on google, both have identical return 61.70 vs 61.07, but considering that KO has at least double dividends of SPY, KO should've perform much better


but PEP and KO are different companies right ? ... PEP derives about half its income from snack foods whereas KO is mainly a beverage company


----------



## PatInTheHat

GoldStone said:


> *Total return with dividends reinvested*
> 
> Jan 1993 - Feb 2014 (21 years)
> 
> SPY: 9.05%
> KO: 8.37%
> 
> I think the gap of underperformance will widen going forward. This is not exactly the Golden Age for sugary caffeinated water. I don't see how the next 21 years can be better than the last 21 years.


I would tend to agree with GoldStone


----------



## Homerhomer

GoldStone said:


> *Total return with dividends reinvested*
> 
> Jan 1993 - Feb 2014 (21 years)
> 
> SPY: 9.05%
> KO: 8.37%
> 
> I think the gap of underperformance will widen going forward. This is not exactly the Golden Age for sugary caffeinated water. I don't see how the next 21 years can be better than the last 21 years.


By this logic the resent performance of KO should have been even worse than the index, but that is not the case, in the last 6 years KO has outperformed the index by quite a margin. It really depends when is your starting point ;-).

I do agree though that with the company of this size and in this industry the growth may be very slow or it even may not be any growth, it will depend on how the company can adopt and branch out the revenues, however I can see folks doing relatively well with this one if buying on dips, and if I thought this would give me 8% each year for the next 20 years I would buy it in a heart beat ;-). If it dips more I will buy as well ;-)

Coke is not going anywhere anytime soon, sugar or not ;-)


----------



## PatInTheHat

Homerhomer said:


> By this logic the resent performance of KO should have been even worse than the index, but that is not the case, in the last 6 years KO has outperformed the index by quite a margin. It really depends when is your starting point ;-).
> 
> I do agree though that with the company of this size and in this industry the growth may be very slow or it even may not be any growth, it will depend on how the company can adopt and branch out the revenues, however I can see folks doing relatively well with this one if buying on dips, and if I thought this would give me 8% each year for the next 20 years I would buy it in a heart beat ;-). If it dips more I will buy as well ;-)
> 
> Coke is not going anywhere anytime soon, sugar or not ;-)


Also very true. Your entry points in KO will mean a lot in the short term. If you are trading it there are likely opportunities to make 10+% in a short time frame (1 year or less) but this is no longer a stock I want to buy and hold for 20 years.


----------



## gibor365

PatInTheHat said:


> Also very true. Your entry points in KO will mean a lot in the short term. If you are trading it there are likely opportunities to make 10+% in a short time frame (1 year or less) but this is no longer a stock I want to buy and hold for 20 years.


Just curious which "stock you want to buy and hold for 20 years"?!

_Warren Buffett’s top holdings are almost a who’s who of blue chips and components of the Dow Jones Industrial Average. In addition to WFC stock and KO stock, the top 10 Warren Buffett stocks include International Business Machines (IBM), American Express (AXP), Procter & Gamble (PG), Wal-Mart (WMT) and ExxonMobil (XOM)._


----------



## PatInTheHat

gibor said:


> Just curious which "stock you want to buy and hold for 20 years"?!
> 
> _Warren Buffett’s top holdings are almost a who’s who of blue chips and components of the Dow Jones Industrial Average. In addition to WFC stock and KO stock, the top 10 Warren Buffett stocks include International Business Machines (IBM), American Express (AXP), Procter & Gamble (PG), Wal-Mart (WMT) and ExxonMobil (XOM)._


I see how that reads now.. I wasn't implying there are lots of stocks I want to buy and hold for 20 years but just trying to get the point across that buying and holding this one is very unlikely to repeat it's previous gains. Also Warren Buffet is almost forced into those types of investments because of the sheer size of his portfolio. I'm quite happy owning quite of a few of those companies, Coke however isn't currently one of them.


----------



## GoldStone

Buffett bought Coke in *1988*. That's a long time ago, don't you think?

You have to ask yourself, would he buy Coke today?

I don't know, but here's what he wrote this week in the annual shareholder letter:

----

The goal of the nonprofessional should not be to pick winners -- neither he nor his "helpers" can do that -- but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.

...

My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers.

----


----------



## Longwinston

Not sure that he would call himself a non-professional. Lol
In any case, if you are picking for long term, quality blue chip stocks that pay a growing dividend, I personally see no reason to pay recurring fees to an ETF. Just buy the largest holdings and buy directly.


----------



## fatcat

GoldStone said:


> Buffett bought Coke in *1988*. That's a long time ago, don't you think?
> 
> You have to ask yourself, would he buy Coke today?


great question, i think he would ... coke is facing big challenges but their basic product, cold beverages are not going away anytime soon, indeed if the planet warms, demand to stay cool will grow ... the issue of sugar is a challenge and continuing to find ways to grow is another but coke is the most recognized brand on the planet earth and they have plants in every country (except maybe north korea and i guess a couple more) and resources, money and skills that are unmatched by any other beverage company ... i think they will find a way to sell people cold drinks one way or ranother



> I don't know, but here's what he wrote this week in the annual shareholder letter:
> 
> ----
> 
> The goal of the nonprofessional should not be to pick winners -- neither he nor his "helpers" can do that -- but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.
> 
> ...
> 
> My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers.
> 
> ----


he has advocated index funds for a long time, this isn't new


----------



## GoldStone

fatcat said:


> he has advocated index funds for a long time, this isn't new


The instructions in his will is a new revelation.


----------



## donald

If buffets was to put his money where his mouth is would he not want the people in his will to retain brk shares?
What that saying to his current stockholders?I though him and charlie have the punch card approach(his holdings should outperform long after he passes)
and further more what does that say about who they have placed in his succession planning?(he is not confident in todd combs and co?)
I would be pissed off as a shareholder reading that(brk should be good long-term and good enough for his family,warren dead or alive)
Just my gut reaction.


----------



## doctrine

It would be interesting to see what Coke's value and growth looked like in 1988 to compare. If it is very similar to now then you think it might still be a buy. But it seems expensive to me by most standard metrics - a P/E of 20 for at best 5% EPS growth, and they're starting to throw money at things like Green Mountain Coffee which may or may not work out.


----------



## PatInTheHat

donald said:


> If buffets was to put his money where his mouth is would he not want the people in his will to retain brk shares?
> What that saying to his current stockholders?I though him and charlie have the punch card approach(his holdings should outperform long after he passes)
> and further more what does that say about who they have placed in his succession planning?(he is not confident in todd combs and co?)
> I would be pissed off as a shareholder reading that(brk should be good long-term and good enough for his family,warren dead or alive)
> Just my gut reaction.


I share your feelings. Pretty interesting regardless.


----------



## fatcat

maybe i read his letter differently, i got the impression that he had a specific reason to structure his will the way he did



> My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers.


he is giving all his berkshire shares to charity and so perhaps the structure of the bequests prevents him from just leaving shares to his wife's trust ?

it might have something to do with the fact the he and charlie are close to can kicking and he is worried that without them investors might not hold berkshire in such high regard

IVV has beaten berkshire over the last 5 years anyway

View attachment 448


----------



## donald

That could be fatcat but still.Because of the size of brk?is that why?
It will be interesting to see what happens after those two pass(munger/buffet)
You would think though he would instruct his wife to re purchase brk shares(he knows that company better than anyone on earth and should know the future plans ect)
Not a comfortable comment to shareholders regardless,betting against his co vs a index.


----------



## Westerncanada

fatcat said:


> great question, i think he would ... coke is facing big challenges but their basic product, cold beverages are not going away anytime soon, indeed if the planet warms, demand to stay cool will grow ... the issue of sugar is a challenge and continuing to find ways to grow is another but coke is the most recognized brand on the planet earth and they have plants in every country (except maybe north korea and i guess a couple more) and resources, money and skills that are unmatched by any other beverage company ... i think they will find a way to sell people cold drinks one way or ranother
> 
> he has advocated index funds for a long time, this isn't new


Further to this.. although Coke is the flagship brand, they are extremely diversified with respect to Juices/Energy and Other beverage categories.. with two key components they also bring to the table from a mobility standpoint: 

*They have significant Cash Store's to purchase/acquire any of the next wave of blue chip beverage companies. *

*They have one of the largest distribution business models in the entire world.. and can react immediately to adding new products into the largest retailers country wide better then anyone else. *

I feel these two items would put them in a strong position to weather the demise of soda water and would not put it past them at one point to brand out beyond beverages with their distribution network..

*Just to add.. I spent 10 Years with PEPSICO on the beverage side and have watched these guys closely...


----------



## fatcat

Westerncanada said:


> Further to this.. although Coke is the flagship brand, they are extremely diversified with respect to Juices/Energy and Other beverage categories.. with two key components they also bring to the table from a mobility standpoint:
> 
> *They have significant Cash Store's to purchase/acquire any of the next wave of blue chip beverage companies. *
> 
> *They have one of the largest distribution business models in the entire world.. and can react immediately to adding new products into the largest retailers country wide better then anyone else. *
> 
> I feel these two items would put them in a strong position to weather the demise of soda water and would not put it past them at one point to brand out beyond beverages with their distribution network..
> 
> *Just to add.. I spent 10 Years with PEPSICO on the beverage side and have watched these guys closely...


+1 .. agree which is why i bought them


----------



## Westerncanada

fatcat said:


> +1 .. agree which is why i bought them


I've heard several Hedge's are calling for a short on this stock, not sure why exactly but hard to imagine this not being a solid play in the long term down the road. 

What really interest's me is there in-home brewing Idea that they are launching with Keurig Coffee Machines... this is an untapped Market for CCE and excited to see what comes of it..


----------



## Longwinston

Westerncanada said:


> I've heard several Hedge's are calling for a short on this stock, not sure why exactly but hard to imagine this not being a solid play in the long term down the road.
> 
> What really interest's me is there in-home brewing Idea that they are launching with Keurig Coffee Machines... this is an untapped Market for CCE and excited to see what comes of it..


CCE? You mean KO right?


----------



## Westerncanada

I do mean KO.. CCE Is Coca-Cola Enterprises..


----------



## Longwinston

Westerncanada said:


> I do mean KO.. CCE Is Coca-Cola Enterprises..


K, just making sure


----------



## fatcat

good article on KO in the globe
i agree with his argument
http://www.theglobeandmail.com/glob...asons-you-shouldnt-sell-coke/article17308800/


----------



## Westerncanada

fatcat said:


> good article on KO in the globe
> i agree with his argument
> http://www.theglobeandmail.com/glob...asons-you-shouldnt-sell-coke/article17308800/


Great Article.. not many .. if Any companies can claim that kind of Dividend rise.. and these guy's are aggressive and will not lie down easily..



Two other huge upside's they have is there contract with the Olympic Games.. in addition to the World Cup.. they are both flagship sponsor's.. and as Media Grows easier and wifi access increases these types of sponsorships will only grow in value and end user recognition.


----------



## favelle75

NOT paying the CEO so much is always a good sign...:

http://ca.finance.yahoo.com/news/coca-cola-ceos-pay-drops-16-per-cent-180230468.html


----------



## My Own Advisor

As long as Buffett holds 400 million shares, I think it's a good bet.


----------



## MrMatt

My Own Advisor said:


> As long as Buffett holds 400 million shares, I think it's a good bet.


If you're going to play "follow the Buffett", buy BRK


----------



## My Own Advisor

I wish I could afford it  Even B shares...pricy now.


----------



## CPA Candidate

Although I have a soft spot for Coca Cola as my family ran a bottling franchise in Ontario for many decades, and I am a Coke Zero addict, I feel like the stock will be in a holding pattern for the foreseeable future. Will an investor lose money on KO? Very unlikely, but at the same time I don't think an investor will maximize returns being invested in KO.


----------



## Westerncanada

CPA Candidate said:


> Although I have a soft spot for Coca Cola as my family ran a bottling franchise in Ontario for many decades, and I am a Coke Zero addict, I feel like the stock will be in a holding pattern for the foreseeable future. Will an investor lose money on KO? Very unlikely, but at the same time I don't think an investor will maximize returns being invested in KO.


I think with their track record on Dividend payout.. this will remain a pretty stable performer in our lifetime. One of the great about things about having a 52 year dividend streak is there is a ridiculous amount of pressure to continue that performance.. and with the nature of how competitive the market place is now vs 25 years ago the pressure to perform is at an all time high..


----------



## fatcat

CPA Candidate said:


> Although I have a soft spot for Coca Cola as my family ran a bottling franchise in Ontario for many decades, and I am a Coke Zero addict, I feel like the stock will be in a holding pattern for the foreseeable future. Will an investor lose money on KO? Very unlikely, but at the same time I don't think an investor will maximize returns being invested in KO.


well, lacking the ability to predict the future i'll stick with trying to make sense of the past ... coke needs to prove it has run off the rails, until then, it has a solid record of providing investor value

it will be fun to see how much coke drops if and when we find out warren buffet has dumped his shares ... not likely ... warren looks like a coke drinker, all that cola nut and phosphoric acid has turned his hair white

i just had a pretty good hambuger at dairy queen and wished i had bought brk.b back when it was piddling around at 113 for oh, the last 6 months or so ...

does he own the canadian dairy queen ?


----------



## MrMatt

Re: BRK.B, you don't have to buy 100, plus they're only $125, you could buy 50 or 20.


----------



## My Own Advisor

Interesting reading...

http://web.tmxmoney.com/quote.php?qm_symbol=KO:US


----------



## fatcat

My Own Advisor said:


> Interesting reading...
> 
> http://web.tmxmoney.com/quote.php?qm_symbol=KO:US


their going to buy out a 180B company ?


----------



## My Own Advisor

Apparently....we'll see...just rumours so far....


----------



## MrMatt

fatcat said:


> their going to buy out a 180B company ?


Not with only 10% of the stock now, and $45B in cash. I'm sure BRK could scrounge another 100B if they needed to, but I doubt they want to.
The idea of a 130B company buying a 180B is a bit ambitious (BRK is $150-the ~20B KO stake)


Also Warren said there was no chance of that. I don't see it happening.

Likely just a soundbite to get in the news for a hedge fund manager, and push his real agenda (boost the value of his stake)


----------



## fatcat

heinz is one thing
maybe clorox
but taking coke private ?
the old man has hit his peter principle


----------



## fatcat

very good bloomberg businessweek article on coke
http://www.businessweek.com/article...a-sales-decline-health-concerns-spur-relaunch

i sold mine, the article outlines the problem and what coke intends to do about it

coke thinks they are going to come out with smaller size drinks which consumers don't mind paying more for and somehow they will win people back to love carbonated sweet beverages 

it might work but wont be easy 

almost 70% of their sales come from sweet carbonated beverages which are tanking with consumers

like mcdonalds, coke is seeing its customers move on and leave them behind


----------



## gibor365

KO dropped today more than 6% on missed earning.... what do you think? worth buying at those levels?
When PEP had similar issue 1.5-2 years ago , I bought and it was very good...


----------



## doctrine

I took a look, but it's not even below August lows. I'd like to get some KO but it's probably going to have to be at a 52 week low or lower.


----------



## My Own Advisor

Bad news for _great stocks_ are a good thing.


----------



## gibor365

doctrine said:


> I took a look, but it's not even below August lows. I'd like to get some KO but it's probably going to have to be at a 52 week low or lower.


True! But on other hand yield now is 3% and it practically never exceeded 3% in last 4 years...


----------



## GOB

KO's multiple is way too high for the growth it is not going to deliver in the future.


----------



## doctrine

I think the brand is solid and I consume my fair share of their products, but I think given growth has stalled, and the size of the company, that you need a margin of safety. Might become a bit of a turnaround. I think it's heading in the same direction as McD's, which is closer to a buy for me. A P/E below 15 on either is a good buy signal, in my own opinion.


----------



## GOB

It would be a rock solid buy and hold at the appropriate valuation. I agree a 15 P/E would be a good point to start looking. Certainly not a stock you need to rush into at a 22 P/E after management basically said growth is going to be zero for 2015.


----------



## My Own Advisor

This company is not going anywhere and dividends will be hiked again soon.

"The Coca-Cola Company has paid a quarterly dividend since 1920 and has increased dividends in each of the last 50 years. The dividend payment amount below is the actual amount paid per common share."

http://www.coca-colacompany.com/investors/stock-history/investors-info-dividends


----------



## GOB

Dividends aren't going anywhere for sure. But yield is fairly low and payout ratio is over 65%. If they can't return to growth they'll be paying more and more of their earnings to the increasing dividend, and the stock may be stagnant. Have to wonder if there are better plays for the next 20-30 years of dividend growth, combined with capital appreciation. I think the junk food industry is nearing its peak.

When I'm looking for a dividend growth stock, I want to see a company that is committed to annual dividend increases. I don't really care if it's been 10 years or 50 years. At that point, it's the same to me. Future growth prospects become much more important. After all, the best returns in KO would have been before it was established as a dividend champion, and though I didn't exist at the time I would argue it could have been foreseen that KO would be around and growing for a long time 20-30 years ago.


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## gibor365

_When I'm looking for a dividend growth stock, I want to see a company that is committed to annual dividend increases._ I also look for such company ... and KO is imho one of them... as well as PEP and MCD


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## cashinstinct

Dividend growth stock are so popular these days, but are they worth 20+ P/E ?

I was looking at KO recently since it's so often mentionned for its dividend policy... valuation still seems generous in terms of P/E.


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## fatcat

this article nails KO and MCD pretty well: http://www.theglobeandmail.com/repo...slim-down/article21209076/#dashboard/follows/

people are simply developing better taste, they want better tasting, fresher, healthier food

i grew up on coke and mickey-d's and frito-lay and i keep looking at them but just can't pull the trigger, not so much pepsi but mickey-d's and coke have a big job ahead of them to turn things around, especially mcdonalds which i think is really almost a troubled company ... their restaurants look awful to me, filled with 3 groups: old people like me, children and poor people ... i am not seeing 20 and 30 somethings in mcdonalds and that is a big problem


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## GOB

gibor said:


> _When I'm looking for a dividend growth stock, I want to see a company that is committed to annual dividend increases._ I also look for such company ... and KO is imho one of them... as well as PEP and MCD


Out of context. The point I'm making is I'll take a company that has grown dividends for 10 years and has good growth ahead of it over a company that has grown dividends for 50 years and is struggling to realize growth in the present day and the future.


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## gibor365

> their restaurants look awful to me, filled with 3 groups: old people like me, children and poor people ... i am not seeing 20 and 30 somethings in mcdonalds and that is a big problem


 there are a lot of children and poor people in Canada  ... and where you gonna see 20-30 y.o. É! Mostly in night clubs and strip bars.... maybe in Jack Astor or The Keg..... and I hold all MCD, SRV and KEG 
btw, when I travel in France and Germany, I`ve seen a lot of 20-30 y.o people in MCD


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## gibor365

GOB said:


> Out of context. The point I'm making is I'll take a company that has grown dividends for 10 years and has good growth ahead of it over a company that has grown dividends for 50 years and is struggling to realize growth in the present day and the future.


 who knows about future  Are you sure that AAPL will bring you more than KO or MCD in 10-20 years ?! I have no idea.... but in any case , I hold both kind of companies you describe....

KO is not only Cola
Coca-Cola has 11 still brands that sell more than $1 billion per year. These brands are listed below:

Minute Maid Pulpy (NASDAQ:CHINA)
Minute Maid
Del Valle
Georgia coffee drinks (primarily Japan)
Aquarius
Powerade
BonAqua
Sokenbicha
Dasani
Vitamin Water
Simply line of juices


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## bettyboop

fatcat said:


> this article nails KO and MCD pretty well: http://www.theglobeandmail.com/repo...slim-down/article21209076/#dashboard/follows/
> 
> people are simply developing better taste, they want better tasting, fresher, healthier food
> 
> i grew up on coke and mickey-d's and frito-lay and i keep looking at them but just can't pull the trigger, not so much pepsi but mickey-d's and coke have a big job ahead of them to turn things around, especially mcdonalds which i think is really almost a troubled company ... their restaurants look awful to me, filled with 3 groups: old people like me, children and poor people ... i am not seeing 20 and 30 somethings in mcdonalds and that is a big problem


When I walk past the food court MCD is the only one that has a line out of all the food choices there, SBUX has a line but in the morning only. I see many teens and young adults there along with the seniors. When I see what people are buying at the grocery store, it's junk not healthy foods, especially the young mothers with children, the new immigrants, older people also. I see only a small fraction of people choosing healthy. 

I don't see junk food going out of fashion in our lifetime. I already own KO so I'm not adding here but will pick up some MCD soon.

EDIT: I was in Italy for 2 months this spring and the MCD I went to the prices were double what we pay, 8 E for a burger! and it was full of young adults (16-25). One of my friends doesn't drink coffee so she'd order KO at every café we went to, no PEP on the menus only KO @ 3.50 E a pop!


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## GOB

gibor said:


> who knows about future  Are you sure that AAPL will bring you more than KO or MCD in 10-20 years ?!


I'm as sure as one can be in this market. Both in capital return and dividend growth (AAPL's payout ratio is under 30%).


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## gibor365

bettyboop said:


> EDIT: I was in Italy for 2 months this spring and the MCD I went to the prices were double what we pay, 8 E for a burger! and it was full of young adults (16-25). One of my friends doesn't drink coffee so she'd order KO at every café we went to, no PEP on the menus only KO @ 3.50 E a pop!


In Germany MCD counted not like "fast-food junk food", but like restaurant 
I work in industrial aarea of East Mississauga, there are many fast foods around, but the most people having lunch , always in MCD, I don't go there frequently, but when I do, there is always line and MCD 80% full


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## gibor365

GOB said:


> I'm as sure as one can be in this market. Both in capital return and dividend growth (AAPL's payout ratio is under 30%).


You see  but I'm not sure, this is why I have all stock mentioned and even some "rare" growth stocks like XLNX


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## fatcat

bettyboop said:


> I don't see junk food going out of fashion in our lifetime. I already own KO so I'm not adding here but will pick up some MCD soon.


it really depends on how much wealth we generate as a society and how much income is in the hands of the middle and lower class but i actually do see junk food fading considerably, people are daily being educated about better food choices, we see it everywhere

hamburgers will never go away but the ones that remain might be the $6 variety 

mickey d's serves a hamburger for 1.39 ... you cannot make anything of quality for 1.39 ... i think this is actually gradually changing so i disagree

i have been looking at MCD for a long time and i will continue to pass for the moment


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## gibor365

_people are daily being educated about better food choices_ people also daily educated about investments, but still majority keep their money in chequing accounts and majority who buying equities buying high MER mutual/seg funds


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## Synergy

gibor said:


> _people are daily being educated about better food choices_ people also daily educated about investments, but still majority keep their money in chequing accounts and majority who buying equities buying high MER mutual/seg funds


Agreed. People have known for years that they should eat better, exercise, reduce their stress levels, etc. but do they, NO. People are slow to change and quick to revert back to old ways. Sure, things are changing a little, but it's going to take a lot of time and therefore there's still mnoney to be made IMO.

Anyone that sells bottled water - highway robbery, must be doing okay!


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## gibor365

Fast food is popular in NA because it's fast, cheap, convenient ... we don't have siesta here like in Spain  
btw, about "healthy" food.... take for example fruits and berries you can buy here... maybe they healthy...but i'm not sure what chemicals were used to grow them ... also, if you tried REAL fruits and berries , you will see that this is "2 big differences"


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## donald

10 yrs ago supersize me came out(where the guy was on his deathbed after eating mcd a mth striaght)a few yrs later mcd started one of there best runs(stock)
I don't completely buy this health craze(it's just seems that way because "were" likely beyond middle class (cmf)
I think the last quater is actually a positive for mcd because they will really be focusing now and if they get traction with this customized burger touch screen menu(was reading about this)I think it could propel them
On the social media front they really are rebranding there image
I wouldn't count them out long term over a few weak quarters
Just my opinion


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## fatcat

i'm not necessarily making the argument that mcdonalds food isn't healthy, i am saying that it doesn't taste as good ...
the burger has remained the same and tastes have evolved
look at all the places selling high-end $10-12 burgers

one of mcdonalds prime strengths is speed
they do speed better than anyone in the business
and it is difficult to reconcile a higher end, more customized burger with really fast service

they have a menu problem (among others)


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## Synergy

donald said:


> 10 yrs ago supersize me came out(where the guy was on his deathbed after eating mcd a mth striaght)


He was on his death bed because he was consuming way too many calories - "gorged" daily on MCD. I'm not saying it's healthy long term (years), but if someone consumed MCD 3x/day for 1 month and didn't exceed their caloric threshold, then there would have been negligible negative health effects. Personally I'd never eat at MCD but the whole "supersize me" movie was blown out of proportion.


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## donald

True enough Synergy,my main point was i can't think of many companies that could withstand that kind of attack let alone thrive like they were after the movie released.
Was there ever a time people thought mcd was ever good?I was born in 79 and i remember really well how even when i was growing up mcd had a bad rep(it has had this unhealthy image for a long time,maybe even since the very beginning?)People are not just waking up to this.
I just can't see the most recognized brand in the world(the golden arches)getting phased out anytime soon(by the likes of a mexican fast food joint).
Your not going to get rich owning this stock but people don't invest in mcd for that anyways....i think long term it is still a bedrock in the fast casual sector(they have such a wide freaking moat)just a few bad quaters.


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## Synergy

donald said:


> True enough Synergy,my main point was i can't think of many companies that could withstand that kind of attack let alone thrive like they were after the movie released.


Agreed. I just wanted to ensure that people reading don't jump to the conclusion that MCD is evil based on some "made for TV" documentary.


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## Rusty O'Toole

McDonald's never was considered good food, hamburgers fries and pop were never considered good food. Ray Kroc got this criticism all the time. His response was, "you aren't supposed to eat at McDonald's every day. It is for people who want a quick lunch while traveling".


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## fatcat

Interesting article about coke partnering to sell a high-tech version of milk ... I'd love to try some.

The article claims, incorrectly I think, that only a quarter of Cokes sales come from carbonated beverages.

I wish that were the case.

http://www.cbc.ca/m/news/business/coca-cola-gets-into-milk-business-with-fairlife-brand-1.2850550


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## donald

I think this is good news for coke(milk)
I think that could be right fatcat(quarter of sales/carbonated traditional coke)
This is by no means a accurate observation and could be totally irrelevant but last week i just happened to be at co-op gas station(again take what you will from this)and i was filling up a coffee right beside the 'coke' guy and the manger of the store and they were running down the pick lists with all the items he just rolled in.
nearly one third was Dasani water,another 1 3rd was that vitaminwater and of the remaining 3rd it was equal parts of jucies/energy drinks and the traditional pop.
One thing you got to love about coke or pepsi also is they are so big that even if a new product comes to market they simply just buy it up(monster energy is a good example)
But anyways should be interesting to see how this milk offering pans out(coke is sure giddy in there analysis)


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## donald

One thing i find fascinating is the explosion of bottled water(maybe this has been already mentioned up-thread)
And the size of the market
20 years ago if you told someone tap water was going to be obsolete people might of thought you were crazy.
I grew up in a house hold where it was perfectly normal to run the tap and help yourself to a glass(or use the water for ice t mix or punch or whatever)
Now the average millennium would think they are going to dye if they ever drank tap water(a 1 litre of dasani is not cheap)
I still sometimes drink from the tap and some people look at me like a weirdo


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## fatcat

donald said:


> I think this is good news for coke(milk)
> I think that could be right fatcat(quarter of sales/carbonated traditional coke)
> This is by no means a accurate observation and could be totally irrelevant but last week i just happened to be at co-op gas station(again take what you will from this)and i was filling up a coffee right beside the 'coke' guy and the manger of the store and they were running down the pick lists with all the items he just rolled in.
> nearly one third was Dasani water,another 1 3rd was that vitaminwater and of the remaining 3rd it was equal parts of jucies/energy drinks and the traditional pop.
> One thing you got to love about coke or pepsi also is they are so big that even if a new product comes to market they simply just buy it up(monster energy is a good example)
> But anyways should be interesting to see how this milk offering pans out(coke is sure giddy in there analysis)


donald, i do agree that there is a movement away from carbonated beverages, especially among younger people, but the last stat i saw was that coke derived about 60+% of sales from carbonated bevs ... non-carbonated bevs are growing much faster than carbonated for sure


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## swoop_ds

I'm 31 and I think it's odd when people think tap water is bad. It is held to a higher standard then the crap you buy in bottles.

As for coke, I think they are good at following trends and making money.


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## Synergy

swoop_ds said:


> I'm 31 and I think it's odd when people think tap water is bad. It is held to a higher standard then the crap you buy in bottles..


I don't think it's odd. Tap water tastes horrible and is loaded with chlorine. A simple carbon filter is a quick fix for that. There are also concerns over long term consumption of chlorinated water - increase risk of certain types of cancers. Pharmaceuticals making their way into drinking water is another growing concern. I normally never drink bottled water but while on vacation in a foreign country, I'll take a bottle of water over tap water any day. Bottled water has it's owns risks, concerns, environmental issues, etc.


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## donald

Not that it matters Synergy but you can't compare canadian tap water for consumption anywhere near consuming water in a host of foreign countries.
I would never drink tap water in mexico either for example but that is vastly different(your not comparing 3rd world countries water to us right?)
I don't know,not to sound like a moronic hillbilly but like my grandpa always said to me 'in small quantities a little bacteria is good for the immune system' i tend to agree with him.
Not to change gears but i also get looks if i eat fruit or veggies without washing them straight from the store,just something i am not considered about(maybe i should be though)


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## Synergy

donald said:


> Not that it matters Synergy but you can't compare canadian tap water for consumption anywhere near consuming water in a host of foreign countries.
> I would never drink tap water in mexico either for example but that is vastly different(your not comparing 3rd world countries water to us right?)


I wasn't trying to compare, just tossed in there to show the importance of bottled water - it ain't all that bad in certain circumstances.



donald said:


> I don't know,not to sound like a moronic hillbilly but like my grandpa always said to me 'in small quantities a little bacteria is good for the immune system' i tend to agree with him.


Well then, why not go ahead and drink the water in Mexico! A little of some bacteria can be nasty - a little cholera, a little hepatitis, etc. There's a a big difference between good and bad bacteria. If a little bacteria wasn't such an issue, our canadian water supplies wouldn't be loaded with such a high concentration of disinfectants. Perhaps you're grandfather was referring to the hygiene hypothesis? Perhaps we should encourage small pox parties and tell parents not to vaccinate their kids - sorry I digress.

http://www.theglobeandmail.com/life...re-too-clean-for-our-own-good/article4586774/



donald said:


> Not to change gears but i also get looks if i eat fruit or veggies without washing them straight from the store,just something i am not considered about(maybe i should be though)


Food borne illness is a major health and safety issues, even in Canada. Washing and peeling certain fruits and veggies may also help to reduce pesticide residues. They do go all the way through the produce but washing can help a little.



> Fresh fruits and vegetables do not naturally contain microorganisms (e.g., bacteria, viruses and parasites) that can cause food poisoning. However, fresh produce can become contaminated in the field through contact with soil, contaminated water, wild or domestic animals, or improperly composted manure. It can also come into contact with harmful microorganisms during and after harvest if it is not properly handled, stored, and transported. In addition, fruits and vegetables can become contaminated through contact with raw food items such as meat, poultry, seafood, and their juices. This can happen at the grocery store, in the shopping cart, in the refrigerator, or on counters and cutting boards in the kitchen.


http://healthycanadians.gc.ca/eating-nutrition/safety-salubrite/produce-fruits-legumes-eng.php


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## donald

But don't you find a interesting coloration between the bottle water rise(ie:coke/pepsi corp)and the demise of tap water?
Basically these companies have turned selling water into over a 100 billion dollar annual sales(over taking carbonated drinks)
They created something that was FREE(it cost'd a faction of a penny to have a glass of tap water)into a huge market.
It's just something that makes one go hmmmm


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## Synergy

^ They've done a fantastic job - thumbs up on being able to sell ice to Eskimos. It's not a real mystery though. A lot of people find it extremely convenient to have bottled water on hand - like it's really that hard to bottle your own water before you head out the door, but people are lazy! Others believe it's safer, some like the taste better, and others may feel that it's healthier - higher mineral content in some mineral waters, etc.

I think people are getting the messages. I see more and more people using stainless steel and BPA free plastic bottles to store their own tap water these days.

I for one would happily except tap water at any restaurant in Canada, but that's a topic for the Frugality threads. Restaurants also do a pretty good job of selling food that can be prepared at home for a fraction of the cost.


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## gibor365

KO down almost 5% after pretty good earnings.... Anybody buying? I'd like to buy , but imho $44 is still expensive


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## mrPPincer

looks a little pricy to me after looking at google finance.
It says the p/e is 26.7 right now. 

I have no idea if that is accurate or not, but if it is there would have to be some huge growth prospects in the pipeline to make it in any way interesting to me.


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## Eclectic12

swoop_ds said:


> I'm 31 and I think it's odd when people think tap water is bad. It is held to a higher standard then the crap you buy in bottles ...


There was something like an eight day delay before the boil water advisory was given for KW, resulting in a ton of people sick for a week or more. There was the Walkerton scandal, where again people were sick but despite tests that should have resulted in an advisory (seven died). Saskatechwan had seven thousand sick.

Accord to a 2015 news report, Health Canada lists seventy-five substances where of eighteen Canadian cities surveyed ... only Ottawa tests for all seventy five. Some of the cities say they aren't testing for the substances because they don't believe the substances will be found or have previously only shown up in tests a low levels.

A gov't study from the same year concludes millions of Canadians are getting their water from substandard municipal and private systems but say the risk of getting sick is low. A water safety expert from a firm that helped advise the Walkerton inquiry was surprised that 1.5 million Canadians get their water from a municipal system that has one form of water treatment or none at all.


Cheers


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## mrPPincer

Given all of the above, still, there is no barrier to entry for newcomers in the 500ml-water-bottle-selling-gig is there? 
The edge is all just about branding isn't it?


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## Pluto

gibor said:


> KO down almost 5% after pretty good earnings.... Anybody buying? I'd like to buy , but imho $44 is still expensive


When is it ever cheap? Last time was '09 for a very short period it had a p/e of 13 and a yield of 3.4, otherwise historically p/e seems to average in the mid 20's. On a yield basis, it seems to average <3%. So if you get it at 3% or better, you are probably doing OK.


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## treva84

Pluto said:


> When is it ever cheap? Last time was '09 for a very short period it had a p/e of 13 and a yield of 3.4, otherwise historically p/e seems to average in the mid 20's. On a yield basis, it seems to average <3%. So if you get it at 3% or better, you are probably doing OK.


Personally I think it's still expensive, even with the recent drop. I think, because bond yields are so low, people are flocking to large cap safety consumer staples for security. When bond yields start to significantly rise I think these propped up consumer staples will drop. That's when I'll think about buying. In the meantime, there are lots of other high quality companies that can be purchased at a better valuation.


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## Pluto

Could be. But in 97 -98 ko had p/e of 50 -60 and 10 year bond yields were much higher.


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## gibor365

Pluto said:


> When is it ever cheap? Last time was '09 for a very short period it had a p/e of 13 and a yield of 3.4, otherwise historically p/e seems to average in the mid 20's. On a yield basis, it seems to average <3%. So if you get it at 3% or better, you are probably doing OK.


Exactly! I'm considering to add shares if price drops to $41-42 range when yield close to 3.5%


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## Eclectic12

mrPPincer said:


> Given all of the above, still, there is no barrier to entry for newcomers in the 500ml-water-bottle-selling-gig is there?
> The edge is all just about branding isn't it?


Possibly ... I haven't checked out what the regulations are. Though if the province is okay with cities using only one form of treatment (or none), one would expect that water bottlers would have low requirements.

In some cases that I've read about, tap water was being used to fill the bottles or for some beers that had pictures of mountain on the label. :frown:


Cheers


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