The Coca-Cola Company ( NYSE:KO ) stock beat the S&P 500 in 2022. In an October panic selloff, the market sent weak holders sprawling, from which the leading non-alcoholic beverage company recovered admirably. As a result, Coca-Cola stock posted a nearly 11% total return versus S&P 500’s 1.2% gain, as investors avoided higher-risk names in the index in favor of the security of Coca-Cola’s business model.
Investors should consider whether Coca-Cola’s near-term upside has been reflected in its 10-year total return CAGR of 8.5%. Regardless, we understand that income investors rely on the consistency of Coca-Cola’s dividend streams and need more clarification about specific entry levels.
However, investors who chose the lows in October should now understand why picking the right levels to add can lead to outperformance with improved reward/risk. As a result, we advise investors to be patient with Coca-Cola, expecting another significant drop to add more exposure.
Coca-Cola Expects to Continue Performing Well
In a recent Redburn conference , the company stated that it expects to continue performing well despite worsening macroeconomic headwinds. Notably, it stated that the dollar’s strength had hampered its growth momentum because the company prices in their respective local currencies.
As a result, the rise in the Dollar Index in 2022 has hampered the company’s momentum, with revenue growth expected to slow to 10.6% from 17.1% in 2021. Normalcy should be expected as Coca-Cola recovers from its 2020 pandemic woes. Furthermore, given its nearly 63% ex-US revenue exposure, such a performance is quite impressive.
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