ASX Shares Coca Cola Amatil (CCL)

Using my Superfund I went and bought thousands of Coca Cola Amatil Shares a few weeks ago which went up a few cents in price.

Watching Foxtel Money program yesterday there was a young guy on there , actually he only looked about 19 , but anyway apparently he knows what he's doing , he said CCL shares were gonna go down down down !!

According to him no one will be drinking sugary drinks soon but will be drinking A2 milk so shares in Coca cola will go under $8 soon as its overpriced ???

Anyone agree with him ? Im thinking I will have to sell quickly .

 

Have an optimistic sell order on my CCL shares @ 9.50, not desperately holding onto them, but not in a rush to sell them either.

 

For every bloke who goes on TV saying that the share price will fall somebody else will say that it will go up.

The primary driver for somebody to go on TV is to get publicity - so the more controversial and disturbing the better.

If you want an opinion their are a few cheap investment newsletters that will give a complimentary readership. You could get a detailed report there.

 

CCL has a large spread out-side coke-cola and i have read long-term they may have a problem-short-term and go below 7 bucks but the same person said TLS will go below 3 bucks problem is no one knows..imho ..

 

I don't think it is going anywhere, still huge markets that should increase their coke and associated product consumption over the coming decades. Great yield today and possible growth going forwards (EPS and DPS predicted to increase).
Lots of analysis companies do have it as overvalued so maybe I am missing something.

One thing that stuck with me from "that sugar movie" is a kid loosing all his teeth at 18 as they were completely ruined, can't imagine the other health effects. Still he was keen to continue with his pop consumption. Seems like customers will be keen to line up no matter the consequences.

Might want to look at health companies too, diabetes is surging in many countries, especially those becoming affluent that don't drink alcohol.

 

I'd say it has room to drop to the high 8's for it to be a hold.
But then again one of the rules of investing is to not listen to other people, like the guy on TV and me. Just remember Jim Cramer.

 

Just my uneducated opinion but I didn't think it was worth buying last year. Yes they have a diversified product line but with NPAT and EPS growth outlook poor I can't see the point risking capital here.

 

I remember Warren Buffet explaining how coke does not have "memory", you can drink as much as you want, unlike, if you had mcDonalds for lunch, for one whole week, you would get sick of it.

Having said that, I do not drink coke nor any fizzy drinks. As per google, 63% of Australians are obeise. I think in terms of taking better care of ourselves, I would vote for implementing a form of sugar tax. Do I think coke will fall off a cliff? No - but I do not hold any coke stocks either.

 

Yep, there are few over the counter drugs as addictive as sugar. If you think that last statement is an exaggeration, try going cold turkey for a week. And before you think it would be easy, check out the sugar levels of what's currently in you pantry/fridge. Start with that can of baked beans.

 

Coke now with added fiber!:

https://a.msn.com/r/2/BBAq1T3?m=en-au

 

sugar/coca cola is addictive. A2 milk is stupidly expensive and won't give any benefits to most people.. Mt Franklin and Pump (CCA brands) water have been flying off shelves..

I can't see either scenario playing out.. I'd suggest the "whiz-kid" is wrong on both fronts.

 

If you look at the shelf space in retail stores CCA had 5 and 10 years ago compared to now, it tells the story of a business going backwards. They saw it coming have tried to deworsify but in doing so have gone into products that have a lower profit margin and plenty of competition. Canned fruit, juices, energy drinks and water do not have the pricing power Coke once had. It is certainly not a growth stock and therefore on a fundamental valuation deserves a P/E or 8 to 10 times forward EPS.

 

Bottled Water to Outsell Soda for First Time This Year

However Soda/Fizzy Drinks still bring in more money

Coke etc got into this trend early though and own some of the large water companies

As per the article

The biggest U.S. bottled-water companies are Nestle Waters, Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group

 

I was reading in the paper yesterday, even with bottled water, the other brands are massively cheaper. Cokes brands are losing market share to other brands of bottled water.

 

Bottled water price war bruising for Coca-Cola, Asahi

A price war in Australia's $800 million bottled water sector is souring the strategies of Coca-Cola Amatil and Japan's Asahi Beverages, who were counting on water to be help offset the pain of a soft drinks businesses hit hard by a growing anti-sugar backlash.

The $20 billion giant Asahi sliced prices of its in Frantelle brand half in the week leading up to Anzac Day at supermarket giant Woolworths in a mega-discount promotion that saw 24-packs on offer for just $6 each. That equates to 25¢ for one 600ml bottle.

But the massive promotional price drop merely brought the Frantelle price down to match what Woolworths and its supermarket rival Coles sell their own private label bottled water 24-packs at every week. Customers pulling the plastic-wrapped 24-packs out of their shopping trolleys into SUVs in the car parks of the powerful supermarket duo as part of their weekly shop are an increasingly common sight.

It's an ominous problem for the big producers like Asahi and Coca-Cola Amatil, which sells the market-leading Mount Franklin brand and the Pump brand. Volumes in the bottled water market are growing by about 20 per cent annually, but profit margins are being skewered as Woolworths and Coles make substantial market share gains.

 

the problem for CCL is that although there is a moat around Coca-Cola as a brand and it will continue to dominate

The problem for CCL is although there is a moat around Coca-Cola in the carbonated drinks market there is no such moat around there other products.

As the carbonated market shrinks the Coke sales shrink even if they maintain their market share.

As the other markets grow there is no guarantee their share will grow or the margins will be good.

Question is when/where will the shrinkage stop in the carbonated market and how will their Indonesian foray play out?

 

I think Coke is a bit like TV....an idea whose time has come....and gone.

Over time it will be viewed like cigarettes....

 

Interestingly enough, cigarettes (perhaps tobacco more correctly) have been an excellent investment over the past ten years.


This thread itself is really important, I think. Regardless of what you think about CCL specifically, I think its really important that you write down (or at least have an idea) of what would cause you to re-evaluate your investment in a specific listed company. If you don’t have confidence after someone you don’t know appears on the TV and has an opposite opinion, that maybe says something about the strength of your investment case in the first place.


Remember, every time you buy listed equities through your broker, someone is willing to sell them to you!

 

Great post. Need to understand your own thesis for holding a stock. Have things changed? or is someone just talking their book. Hint ; All professionals are talking their book. Thats what humans do. Is a problem cyclical, or something else? If sales volume is declining will pricing power offset this ? If the business is shrinking can capital allocation decisions still provide acceptable (or better) return to shareholders? Is market sentiment better or worse than my own view? What is my expected TSR on this for the long term? What is my exposure if im wrong? etc etc