Worst day in 17 months
Coca Cola stocks are normally quite boring with low volatility but today we see a heavy sellout. Coke is down -4% and is currently fighting to keep above the $52. If this support doesn’t hold the stock could fall further towards $48 or even the Corona low at $42.
What‘s the matter?
The stock already declined the past months with investors anticipating that the price increases done because of inflation might come to an end. Now there’s even more fears that the high interest rates could slow down economy and with that drive unemployment. And if people don’t have money they tend to spend less. Simple as that. So the sale of consumer goods companies like Coke, PepsiCo or Mondelez appears comprehensible.
My view
From a risk mangement point of view it makes sense to reduce exposure within a sector that might perform weaker in the coming months. These companies will still have cash flow but the revenues might grow slower and with that the earnings. It’s not clear yet how much this effect will come true and there is a lot of FUD in the market right now.
For me Coca Cola is becoming interesting if they really fall well below $50 where you would get a decent dividend yield of around 4% and the chance of a nice price recovery once the fears recline.
What do you think? Is the Coke stock on your radar?
