The news has been doing a really good job of grabbing my attention these days. This is the second week in a row that I found a rogue headline leading my research. Today’s must-click was “Coca-Cola Loses Billions After Ronaldo Snubs Drink at Euro 2020.”
The only sport that I actively follow is Formula One racing, so I had some quick catching up to do.
Cristiano Ronaldo is a Portuguese football (soccer) forward who has been dubbed one of the greatest players of his generation. And the clip of him from the Euro 2020 press conference is easy to look up.
It shows him sitting down in front of the microphone and noticing two bottles of Coca-Cola sitting in front of him. He makes a face of disgust and pushes them to the side, out of the camera frame. Ronaldo then holds up a bottle of water with the comment “agua,” clearly indicating his preference.
This didn’t necessarily surprise anyone since he’s been interviewed in the past commenting on his disgust of his son’s love of soda.
The interesting part is that shares of Coca-Cola (NYSE: KO) fell on Monday, while the S&P 500 overall was seeing gains.
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The difference between the close price on Friday and Monday’s open was 80 cents. And by 10 a.m. EDT, shares were down another 17 cents.
But before we get ahead of ourselves and let the headlines lead us to the wrong conclusion, let’s take a look at the rest of the factors affecting Coca-Cola’s price.
Monday was the ex-dividend date for Coca-Cola’s most recent dividend. For those that don’t know, the ex-dividend date is the first date that shares trade without the dividend. That means we could have already expected a drop of 42 cents for that reason alone.
I’m not going to lie — after reading the articles, I expected the drop to be way more than what happened. So, I didn’t follow the news spiral. Instead, I headed on over to the Weiss Ratings website to see how Coca-Cola was stacking up against the competition these days. It’s been a company that I’ve followed on and off for the past 10 years, so I never mind an excuse to check in.
KO is more than just Coca-Cola. It’s the company behind Fanta, Sprite, Minute Maid, Honest Tea, vitamin water and many others. It has a $238.9 billion market cap and pays its shareholders a 3% dividend. This strong, stable dividend-paying history is why KO has been in Warren Buffett’s portfolio over the past 33 years.
Right now, KO has a buy rating of a “B-,” but we’ve seen the company dip down into the “hold” range over the past year, only recently getting upgraded in March back into the “buy” range. Shares are up 6% year to date and 22% over the past year.
My conclusion: This dip in prices allows anyone looking to add Coca-Cola to their portfolio to get in for a few pennies less.
While I was on the Weiss Ratings site, I decided to click on similar stocks to see how the rest of the beverage market was doing.
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Let’s take a look at a few.
PepsiCo Inc. (Nasdaq: PEP) is also rated a “buy” right now. In fact, it’s been rated a “buy” since last July. Cheetos, Doritos, Quaker, Tropicana, Tostitos and Gatorade are just a few of the company’s other brands.
The company currently pays a 2.7% dividend yield and has paid consecutive quarterly cash dividends since 1965. Shares are up 11.6% in the past three months and 16% over the past year. Of course, that’s not including any dividends that you could have collected as well.
Monster Beverage Corp. (Nasdaq: MNST) also currently has a “buy” rating. It’s been holding onto that rating since February 2019. There’s no argument that Monster is the leader in the energy drink sector with its vast portfolio of brands. Shares are up 2.6% over the past six months and 32% over the past year.
Last but not least, I decided to take a look at National Beverage Corp. (Nasdaq: FIZZ). This is the company behind brands such as LaCroix, Clear Fruit and EverFresh. It also distributes carbonated soft drinks under the Shasta and Faygo brands.
National is currently rated a “hold” and has not been rated a “buy” since 2018. Shares are down 9% in the past three months but still up 73% in the past year.
Although it made for some interesting “news,” I don’t think Ronaldo’s blatant snub of soft drinks is going to put a dent in Coca-Cola’s success or potential gains for investors in the long run.
Best,
Kelly
