Tonight on Fast Money (@cnbcfastmoney) we talked about
) as discussions swirl around whether they are about to bid
for higher growth in the sector whether it be a prominent energy
juice maker or juice company.
My view is Coke is just fine as it is.
Regarding Monster: Coke does not need to overpay for Monster
to get into a new segment late when we valuations have been
rewarded already. Monster trades at 33X current
earnings, far in excess of the sector.
Regarding their core businesses, people are too focused on
secular headwinds in the North American Carbonated Soft
In short, investors do not need the industry to
improve for Coke's shares to rally, they should merely focus
on the a compelling valuation argument and a global model
that is not breaking down, despite recent sequential weakness in
the top line.
Here are my core views:
- Asia pacific margins are ramping up and per capital
consumption levels still offer upside to growth
- Latin America already has reasonably high per capital
consumption rates but expecting same North America style
slowdown in Latin America is jumping gun.
- Latin America is 24% of operating income and the US is only
19% so concerns about slowing North America should be put into
Expect 6% EPS from Coke with a 2.4% dividend yield over the
next couple years.
Coke trades at 18.5x earnings but offers higher EPS outlook
than Pepsi. Coke should be cautious about overpaying for