I recently wrote a post talking about selling my HPQ stock and having some cash laying around, and I made my first move with the excess. I purchased two options for Coca Cola Co. (Symbol: KO). The options expire Jan 18th, 2014 (669 days from now). The cost was $4.70 at a strike price of $70 (which is now $.59 in the money). All in all I have $960 in KO. The 5-year chart and breakdown is below:
I know what you might be thinking right now. It is virtually at all time high, why would you possible buy this stock for the long haul? This stock is consistently producing profits even in down times (maybe people find comfort in small pleasures?). Also if the economy recovers, I think this stock is prone to show some growth.
A P/E of 19 might seem a bit higher than my normal tastes, but when it comes to industry standards for beverages, it really is relatively normal. Dr. Pepper Snapper Group (NYSE: DPS) has the lowest P/E, but even if it stands at roughly 14 and Pepsi (NYSE: PEP) has a P/E of 16.20. Monster Beverage Corp is the highest with a P/E of 39.39. I would be absolutely worried about owning beverage companies that might be a trend, because just look at companies like Jones Soda Co (JSDA), once trading at $28.22 a share is now at $.49 (-98.26%).
Overall I think Coca Cola Co. (Symbol: KO) is good fit for my investment style and I look forward to seeing what it can do in the next 669 days.