Stock market

Warren Buffett loves shares of Coca-Cola. Should I buy something?

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One of the most successful stock market investors of the last century is billionaire Warren Buffett. It has a portfolio focused on a few blue-chip companies. is one of their long-term holdings. Coca Cola (NYSE: KO ) shares.

As a believer in the financial benefits of long-term investing myself, the fact that Buffett has held onto his Coca-Cola shares for decades catches my attention. In fact, he bought the stake between 1987 and 1994. He has not bought any shares for three decades.

So, should I consider adding Coca-Cola shares to my portfolio?

Every investor is unique.

The first thing to note is that what works for Warren Buffett may not work for others.

Every investor is different. Just using someone else’s investment strategy doesn’t seem wise to me – I need to do my own research.

In fact, Buffett himself makes this point when he says that he always wants to stay within his means when investing. His and my competences are not necessarily the same.

Coca-Cola shares – or other Coca-Cola shares?

It’s also worth understanding what I meant when I said “Shares of Coca-Cola“Top.

It may sound strange, but in reality Coca-Cola is a complex company.

The Coca-Cola Company itself makes a formula and sells it to bottlers, among other functions. Those bottlers (sometimes owned by Coca-Cola) are primarily responsible for their own local markets, operating factories, distribution networks, local advertising campaigns, and the like.

Coke sounds easy to call coke. In reality, though, these are quite different businesses that occupy distinct niches in the value chain.

Over the past five years, for example, New York-listed Coca-Cola (which Buffett owns) has risen 26% and now yields 3.3%.

Coca-Cola European PartnersAlso listed in New York, up 32% and yielding 5.4%.

Meanwhile, this period has seen London listed Coca-Cola HBC A decrease of 7.6% makes its yield 2.7%.

Where is the value?

The performance of different share prices reflects different factors.

As an investor, I always try to get the most value when I buy shares.

I love where Coca-Cola sits. It is essentially a master franchisee and can sell its formula from Manchester to Mogadishu without having to engage too much with the on-the-ground challenges of getting the product into the hands of buyers.

This is a very profitable business model for Coca-Cola itself. It has a strong brand, proprietary formula and protected trademarks.

There are risks, such as changing consumer preferences harming sales of long-standing products. The setup also means that while the bottlers need the central company, the central company also relies on the bottlers to supply their business. But local problems, from water shortages to civil unrest, can get in the way.

Buffett is not buying now.

Despite the risks, Coca-Cola has been a fantastic investment for Buffett.

So why hasn’t he bought any shares since 1994?

I do not know. He may be satisfied with his current stake size. Or maybe he no longer sees Coca-Cola’s share price as attractive.

The rising share price also means the company now trades on a price-to-earnings ratio of 24. It doesn’t look cheap to me.

So, currently, I have no plans to buy shares of Coca-Cola.


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