2024-03-22 08:00:00 ET
Summary
- Coca-Cola is targeting Generation Z, who are digitally savvy and document their lives on social media, as a key demographic for growth.
- The company has implemented strategies such as Studio X, a digital ecosystem, and marketing campaigns that resonate with Gen Z, resulting in increased brand value and strong recruitment of Gen Z drinkers.
- Despite economic challenges, Coca-Cola has seen strong financial performance, with earnings and organic revenue growth, improved gross margins, and increased penetration in key markets. The company's dividend safety is also not a concern, with growing free cash flow to cover the dividend.
- Although FCF is expected to come in lower in 2024 than the prior year, I expect the company to repurchase a significant amount of shares this year, which should alleviate pressure on the dividend safety.
- I suggest those looking to invest in KO wait for a pullback near the $55 level, where I think the stock offers a margin of safety.
Introduction
Looking at the picture above, I think this is a perfect representation of Generation Z, snapping pictures of everything they do in life and documenting it on social media. So, what does this have to do with The Cola-Cola Company ( KO ) you ask? Well, the Dividend King has been targeting Gen Z in its products and for good reason. And this generation, in my opinion, will be a huge part of the company's growth going forward. In this article I discuss why the Dividend King has this generation in its sights and how it should impact their growth positively over the long-term.
Previous Thesis
I last covered KO roughly 6 months ago in an article you can read here where I rated the stock a buy. Then the stock was trading near $56 a share where I think it offered a decent margin of safety for investors. Since then, the stock has gone on to post their Q4 earnings closing out the year strong with some impressive growth we'll discuss later....
Read the full article on Seeking Alpha
For further details see:
Coca-Cola: Why Gen Z Consumers Should Propel Growth Going Forward