Fundamentally, CCL is currently trading at Forward P/E of 15.42 and Price/Book of 4.10. While I am ok with the P/B ratio, since coca cola brand value(intangible asset) is unprecedented and a leader in the beverage industry, the P/E ratio is too high. Based on the current level, the market is expecting CCA to grow by at least over 5% (in comparison with big four banks ratio). Some might argue CCA is a more defensive stock with less impact from the macro-economic environment, compared to banks. However, the recent budget cut has already taken a toll on its sales. Take a look at major supermarket chains. Coca cola is always on discount, yet there is always plenty on the shelve.
Combining the financial statistic and my actual visit to supermarket, Coca cola in Australia is no defensive to economic down-turn but in fact, consumers are actually turning away from unhealthy soda drink and no longer loyal to Coca Cola(when so many alternative drinks are available at cheaper price).
When you buy/hold CCL stock, think to yourself. "Will more people drink Coca Cola in the next ten years?"
If its a "No", then CCL is not worth owning now. There's no point of buying a strong brand company which tries to profit by selling "no so desirable products".
Probably, a few traders got caught in fluctuation, but dont forget that over the past 6 months, a few large funds are "all out" on CCL
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CCL Price at posting:
$9.25 Sentiment: Sell Disclosure: Not Held
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