|Written by GSCR Staff|
|Friday, 19 September 2014 06:32|
With the ‘new’ war pending in the Middle East, a contentious vote for Scottish independence, and a small cap funk here in September, we thought we would diverge from our normal universe today.
OK, so the tagline in today’s blog is dated. You may not remember it if you were born after 1980. The Coca-Cola Company’s (NYSE – KO - $41.79) old commercials were about the happiness and satisfaction one could enjoy from a simple soft drink. We highlight this stock for a change-up today in our normal market highlights to a topic we rarely discuss, dividends, in the form of yield and growth rate. KO offers a great opportunity to put a smile on your face by adding it to the core of your portfolio along these lines.
Coca-Cola has raised dividends 52 straight times! How is that for dividend growth? Right now the dividend yield is 3.1% compared to 2.9% for Pepsico, Inc. (NYSE – PEP), and 2.8% for Dr. Pepper Snapple Group, Inc. (NYSE – DPS). Not only is the metric good in comparison to competitors but also a great indicator of value relative to payout. Only 940 of over 6,100 U.S. equities have a dividend yield over 3% in one of our screeners.
The chart below depicts the 10-year price history of KO. The stock has more than doubled over that time.
10-Year Price History for KO
(Source: Google Finance)
While a 100% return in 10-years is usually not the risk-reward we look for in the small cap world, most would agree this is outstanding for a long term stock given the great dividend history for the Company. Finding new markets and introducing new products that catch on is the growth challenge for companies like Coca-Cola, but they are not going anywhere soon.
We would not be doing our job if we did not take a quick glance at our other basic metrics. First, the technical analysis is very bullish from short to long duration in DMA. The forward P/E is 19 and the trailing P/E is 22. Check two. Finally, operating and gross margins check out above industry averages at 24% and 61% versus 9% and 46% respectively.
Having Coke (KO) to your core portfolio should keep you smiling for a long time!
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com