KO is one of those stocks that can form the cornerstone of an investment portfolio for value investors. The dividend and earnings record is so good that the only thing a value investor really has to worry about is the price that is paid to get access to the dividend stream and earnings potential of KO.
Value investors can get a feel for how much they are paying for KO’s earnings and dividend by looking at the dividend yield and the PE ratio. At the moment KO is trading at a price just over 30 times earnings. For most companies a number over 30 would be considered expensive for a purchase of common stock. There is certainly elevated short-term risk from buying KO common stock above 30 times earnings, but long-term holders can consider a small initial position at current prices. This site has recommended purchases of KO common stock at over 30 times earnings before in 2017 and this would have worked out well for conservative investors.
The price of the common stock of KO has increased in the last 3-4 years as you can see in the chart below.
The question now for value investors is whether the current price represents good price to start a position in KO for new investors or to add to an existing position. The full answer can be found in the new analysis of The Coca Cola Company common stock, which you can find here.
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