Is The Coca Cola Company (NYSE: KO) Still a Good Investment?

The Coca Cola Company has long been considered one of the strongest investment options on the market today. However, as the stock corrects, long-term investors are starting to worry a bit. Now there is a big question surrounding the stock… “Is Coca Cola still a good investment option?” Today we will take a look at the fundamental image, the technical image and of course the overall image to decide if Coca Cola is still a solid investment opportunity.

Coca Cola is going through a fundamentally difficult time

When I think about investing, I generally like to take a longer term approach. Therefore, fundamental analysis is essential. However, when looking at Coca Cola, the basic picture is a bit bleak. The Coca Cola brand is one of the world’s largest beverage companies; and when you pull out the alcoholic beverage business, Coca Cola is literally the biggest brand in the world. So far, that’s great news! Nonetheless, we need to dig a little deeper here.

When we break down Coca Cola’s business, we find that around 75% of the company’s revenue comes from non-alcoholic beverages. Ultimately, soda is the lifeblood of the business; and this is where the problem begins. In recent years, soda has been shown to be incredibly bad for the health of consumers who drink it. In fact, there are more than 10 illnesses linked to soda consumption. They include, but are not limited to, obesity, liver damage, tooth decay, kidney disease, diabetes, heartburn and more!

In the past, this was not really a problem. After all, the FDA hasn’t taken soda off the shelves. However, consumers today are more health conscious than they have been in the past. The simple fact is that people are much more careful with what they put on their bodies today than ever before; and that creates a problem for Coca Cola. Due to the new stance that health-conscious consumers are taking, brands known to cause health problems like Coca Cola, McDonalds and many more are being phased out.

Coca Cola doesn’t look so good technically either

If you look at the technical picture of Coca Cola, things are looking bleak there too. The simple fact here is that investors are realizing that declining income, and therefore profits, is a reality; and they are responding to this decline. In fact, if you view the stock chart for KO, you will see that the stock has seen overall declines throughout 2015.

Coca Cola (KO)

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Coca Cola not only traded lower throughout the year, but when you add the 200 and 50 day moving averages to the chart, a death cross formed in late March. Since then, the stock has seen even worse downtrends as it continues to correct itself.

Now here is the big question about Coca Cola

Coca Cola doesn’t look good fundamentally or technically right now, but it’s a huge company that’s not going anywhere anytime soon. So when is this fix likely to end? Has Coca Cola fallen to a point where it is ready to start making gains again? In my humble opinion, we still have quite a bit of time. In fact, I expect the declines to continue at least until January. I understand that at some point KO will reach support and start moving in a positive direction. However, with the technical picture and the fundamental picture still looking relatively bad, I don’t think support is coming anytime soon. So, to answer the original question “Is Coca Cola still a good investment?” In my opinion, the answer is no… at least not now. However, we will be checking back in a few months to see if anything has changed.

What do you think?

Where do you think Coca Cola is heading and why? Let us know in the comments below!

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