What is your Coca Cola company for the next 30 years?

Monday, Jun 11 2012 by
4

Buffet's 50% yield

One of Buffett's most famous long-term holdings is his 8.9% stake in The Coca-Cola Company (NYSE: KO). The $15bn shareholding is Buffett's company Berkshire Hathaway's largest holding and most of it dates back to 1988, when Berkshire spent $1bn to acquire a 6.2% stake at an approximate cost, adjusted for splits and dividends, of $3.75 per share.

Back in 1988, Coke shares offered a yield of 4% -- decent, but not amazing. Since then, the company has maintained its 50-year unbroken record of annual dividend increases. The result is that in 2011, the dividend payout was $1.88, providing Buffett with a massive 50% yield on his original investment.

 

CompanyMay 2002
share price
2002 yield
on cost
2011 yield
on cost
British American Tobacco (LSE: BATS) 793p 1.4% 15%
SSE (LSE: SSE) 679p 4.8% 11%
Vodafone (LSE: VOD) 118p 1.3% 7.5%
Tesco (LSE: TSCO) 246p 2.5% 6.0%
Unilever (LSE: ULVR) 1,396p 1.5% 5.6%
BAE Systems (LSE: BAE) * 371p 2.5% 5.1%
Diageo (LSE: DGE) 856p 2.8% 4.7%
GlaxoSmithKline (LSE: GSK) * 1,477p 2.7% 4.7%
HSBC (LSE: HSBA) * 830p 4.0% 3.1%
Average yield: - 2.61% 6.97%

 

http://www.fool.co.uk/news/investing/2012/06/08/this-buffett-technique-will-increase-your-dividend.aspx?source=ufwflwlnk0000001

 

It would be interesting to hear what companies fellow investors would choose to Invest in for the next 30 years.

 Special Offer: Invest like Buffett, Slater and Greenblatt. Click here for details »

If there was one company you could choose to Invest in over a 30 year period which would it be and why?

This is not an easy question to answer, it requires a lot of thought and it is very difficult to try and work out what will happen in the next few weeks let alone the next 30 years!

I recognise that none of us our Buffett & we probably should'nt invest like him given the advantages we have as private investors.

I personally prefer to just Buy and Hold, it is more cost effective as you don't constantly pay stamp duty and broker fees. Also I think the less decisions one has to make more often then not the better of they are & I am a strong believer that doing nothing MOST of the times is the right course of action.

Looking back over the last month what was the fuss all about with Soco going to around £2.50ish....

The reality is markets will always move, stocks will always go up and down. The trick is are you smart enough to asses the value of a share as well as a reasonable foresight to see where the future lies for a company and then have the patience to see out the value?


Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
6 thumbs up
2 thumbs down
Share this post with friends




47 Posts on this Thread show/hide all

marben100 16th Jun '12 8 of 47
2

In reply to harryr, post #7

Judges Scientific (LON:JDG) has paid no more than 3-5x EBIT for several such companies. The whole ethos of Buffett & Graham's philosophy is not to overpay (a philosophy which Judge's rather astute CEO and I share). They buy good companies, with sound track records, at reasonable prices.

ISTM that current market fears are offering a number of largecaps, that are likely to do well over a long time period at very reasonable prices. Perhaps my favourite right now, fitting that category, is Weir (LON:WEIR) . It is leader in an area that is likely to be in demand for the foreseeable future and it has grown strongly with further growth forecast, yet the market is currently putting it on a lowly CY P/E of < 10.

Most smallcap investments cannot in any way be considered comparable to the likes of Coca-Cola. They offer an entirely different risk profile (that doesn't mean I don't like them, just that they're an entirely different type of investment ;0)).

| Link | Share
harryr 16th Jun '12 9 of 47

One needs profits growing 30% P/A .Can Weir do that?

| Link | Share | 2 replies
Asagi 16th Jun '12 10 of 47
3

Err.... can I be the first to pick out the obvious? Nichols (LON:NICL).

EPS 5yr CAGR = 17.1%
DPS 5yr CAGR = 9.3%

Asagi

no position Nichols (LON:NICL)

| Link | Share
Isaac 16th Jun '12 11 of 47
1

In reply to harryr, post #9

harryr

If you want to make life changing amounts of money it is not necessarily by buying something that have come down 98% plus from their highs

If Soco were to drop 98% from it's highs it would more liklely then not that they have had their Vietnamese assets confiscated or they have a major Oil spill or some other kind of environment disaster making them liable for millions etc etc - That does'nt sound like a company I would want to Invest in for a life changing amount of money.

I personally think if you want to make A LOT of money then the way to do that is to find 4-5 decent value plays that have the potential to multi bag over a certain period of time. One of the few sectors that offer such an opportunity is E+P IMO.

At the moment I can think of a number of stocks that has the potential to multibag over the next few years and make people life changing sums of money.

If you want to make the big cash in a short period of time it involves taking a large but sensible amount of Risk in say 4-5 stocks with massive upside potential.

I've talked a lot about the HYP and Dividends, but this is a strrategy that will make a reasonable amount of money over a very very long period, not necessarily life changing.

I have recently bought a decent amount of stock in TPL - Tethy's Petroleum - The stock has recently declined a fair amount due to the decline in Oil produce, they produced in q1 around 5000 boepd, this is expected to ramp up to around 10-12,000 boepd by December. The Oil is very high quality at 46 API and a $35 netback, but the more exciting part of the company is Tajikstan with unrisked mean resources of 1,146 MMBOE - a block the size of Switzerland. The netback in Tajikstan is around $60/bbl. Not only that the PSC terms sare very favourable with 70% cost recovery and 70%  profit net of all taxes. TPL own 85% of the licence and own 5 rigs, they will use one of their own rigs to drill in Tajikstan late 2012/early 2013.

Dr Dave Robson is CEO/Chairman and has extensive experience in the area, he is one of the founders of JKX.

I think if TPL takens on reserved based lending or the Oil price stabalises then the share price can re-rate quite swiftly imo. There are plenty of funding options including farming down.

If this works then it can make life changing sums of money IMO as the potential is huge compared to the downside.

Pope Asset Management are large holders in the stock....

 

"Wall Street people learn nothing and forget everything."   Benjamin Graham

Our investment approach is keenly focused on our estimate of inherent value of investments and avoids heavy reliance upon Wall Street research and/or utilizing excessive diversification (i.e., reducing our ability to know our investments).

http://popeasset.com/default.asp

| Link | Share
harryr 16th Jun '12 12 of 47

NICL are now on a pe of 20 [falling on next results]
I want to be investing in stocks on a pe of 4 that can get re rated to 20.[and then pay a divi]
What i am saying is this stock is valued about right so long as it keeps growing.
I also want a product where i have what others want, and i can price the product not the market.

| Link | Share
marben100 16th Jun '12 13 of 47

In reply to harryr, post #9

Did Coca Cola grow profits by 30% p.a.? [as it happens Weir's 5year profit CAGR HAS been 30% p.a.]

| Link | Share
harryr 16th Jun '12 14 of 47

WEIR need to do 30% from now on, it gets harder to do.

Very easy to grow from 100k profit pa at 30% pa for the first few years. plus its fun being invested on a low pe as when things go wrong on a pe of 20 they tend to fall to a pe of 5 overnight.[with a 75% loss]

Weri are fine but not for me.

| Link | Share
Fangorn 17th Jun '12 15 of 47

So what are the "actual names" of those companies Harryr that fit your criteria( I see Isaac has asked you twice for specifics) yet you continue your evasive commentary. I'm sure everyone is interested so they can go away and look more closely at the companies you think fit the bill.

| Link | Share
harryr 17th Jun '12 16 of 47
6

Sorry only found one share. Would like another ten.
The stock i have found i am buying week in week out and to name it here will not make it easy for me to keep buying.
When i have enough shares in the company i will post.

| Link | Share
Fangorn 18th Jun '12 17 of 47
1

Rofl, highly amusing.
Seriously why do you bother even posting if you aren't going to share your ideas - this is what the bulletin boards are all about.



| Link | Share
harryr 2nd Nov '12 18 of 47
1

The company I have been buying for months is Publishing Technology PLC
It has fallen 98% since the dot com boom in the year 2000.
At the time it was called Ingenta.
It is the worlds number one in digital software for publishers.
It is valued at just £9M pounds
It has done a massive deal in China its partner has 60% of the book import market
Broker has.£660,000 profit down for this year.[Dec12]
It has spent the last 5 years producing brand new software for the digital age now finished.
That has cost £2.5 M a year that has been written off as they go along.
It has a tax loss to use up of over £16M
This week the FD bought £50,000 of stock at the high for the year.
Sales that have been flat for 5 years are on the move, most costs are fixed and it only takes a 25% jump in turnover for profits to Zoom.
I have put my money where my mouth is, this week the FD followed me.






| Link | Share
harryr 4th Nov '12 19 of 47
2

Publishing Technology PLC has just 15,000 options and £8.5M shares.

Take a look at the stocks you own.

How many options are diluting your companies earnings.? Now work out as a % of shares in issue.

Publishing Technology PLC has just 0.2% of the shares put by for options, thus profits in the form of EPS go to you as a shareholder not the directors.

When looking for super fast growth stocks you want.

Few if any options.

Tax losses , thus for the first few years company pays no tax. EPS can grow 26% faster year on year.


Publishing Technology PLC.

Number of Shares Grant Date Exercise Price Expiry Date

65 17 April 2002 £150.00 17 April 2012
7,100 21 January 2003 £5.25 21 January 2013
500 30 June 2003 £11.75 30 June 2013
4,254 21 January 2004 £9.50 21 January 2014
100 2 August 2004 £6.00 2 August 2014
100 22 November 2004 £3.25 22 November 2014
2,500 4 October 2005 £1.95 4 October 2015
1,000 30 March 2006 £2.16 30 March 2016

Total 15,619

| Link | Share
gfourmoney 5th Nov '12 20 of 47
1

I would buy Coca Cola (why get second best when you can buy the worlds best franchise) at the right price, somewhere south of $32.
If we are talking UK only then I would buy Tesco, at up to £3.20 , although I am already in so wouldn't buy more now.

| Link | Share
harryr 5th Nov '12 21 of 47
4

A few reasons why I think Publishing Technology plc is the next Coca Cola.

Martyn Rose chairman / 30% shareholder has a rather good track record, selling his share of Macaw soft drinks ltd for £30M plus profit.
That proves to me he and the board know what they are at.

The city tends to fall in love with companies that have a stream of recurring revenue.
Publishing Technology PLC has just that at 65%. I Ithink with the new contract wins it could hit over 70%
.

How many Aim stocks do you own where the company gets out the half year results within 31 days.?
Publishing Technology plc does. Again it points to them being "on the ball"

With a market cap of under £10M pounds today it can grow at the rate of knots, just what an investor requires to beat the market hands down..

About US

Publishing Technology plc is the world-leading provider of content solutions that transform business. We cover the publishing process from end to end with content systems, audience development and content delivery software and services.

The above is from the companies home web page.

Find me another £10 million pound AIM stock that is world leading at that price .

Now we all know about spin, however take a look at who Publishing Technology plc have contracts with, inc 8 out of ten of the largest publishers in the world the world bank, bbc, oecd and many more.. 

Those contracts are topped by the Joint venture in China.This is with the state controlled publisher that has over 60% of the book import maket .The chinese need new digital technology from the west for their five year plan.
Within 3 years China will be the biggest publisher in the world. .

Think how many cans of cola are sold, then change the product to books.

Then note who will be the winners in the new digital age, it will be the companies that can sell books and the only way is by getting book buyers to your web page.

Publishing Technology has the newest software for publishers and others to do just that. 


Over the next few weeks, months, and years the city will wake up to this astonishing company .

| Link | Share
toddwenning 6th Nov '12 22 of 47
3

To find a company that could generate Coca-Cola type returns over the next 30 years, you need two things: 1) To be able to identify a company with strengthening and sustainable competitive advantages and 2) a dose of luck.

In hindsight, it's easy to see that Coca-Cola's brand translated well to global audiences and that it was able to build a highly-efficient and scaleable distribution network, but that could have gone wrong at some point. While management unquestionably deserves some of the credit there, there's no question that some luck was also involved in the company's longer-term success.

One of the things that Coca-Cola did have going for it was multiple sources of competitive advantage -- the combination of brand and distribution network became progressively difficult for competitors to overcome.

The best thing you can do today, then, is to seek companies with at least one source of sustainable competitive advantage, buy them at a good price, and hold them for the longer-term. With some luck, perhaps one or two of your companies could turn out to be the next Coca-Cola.

Blog: Clear Eyes Investing
| Link | Share
fuiseog 6th Nov '12 23 of 47

Me? I would go back to the drawing board harryr. You could start with the kiss principle, because coke did, and still does.
http://en.wikipedia.org/wiki/KISS_principle

| Link | Share
harryr 6th Nov '12 24 of 47
1

For those looking for for the next coca cola a few tips on what i have picked up over the years.

Timing
Buy stocks others can understand.
Buy tiny companies just about to turn in profits.
Buy off the share price lows. You are then often the only buyer
Buy stocks that have lost most of their value over a very, very long time as traders are not in the market and you have it for yourself
I have found a small amount of debt is good as it can get growth moving faster
Understand what profits can do for stocks, re rating on higher year on year profits does wonders for a share price.
Also of note, if a stock has drifted for years and years the Market Makers are more than happy to sell you stock in lumps that they do not have on the books.
They do this knowing full well when a seller shows up they buy it back in for a song.
That is fine, but in rare cases they get caught out with a bid or constant buying.
Investing has risks, the real trick is for your shares to go up hard and fast soon after buying , then just wait for the value /growth to come.In the meantime if the market takes a hit you have got some protection from any falls.


| Link | Share
kevinsamvance 6th Nov '12 25 of 47
7

Gentlemen, you are missing something about Coke. It was a household name when Buffett first purchased it. It wasn't a tinpot Aim stock but has a competitive advantage that Buffett thought would be hard to better. So instead of looking at the bottom end of the Mcaps we should be looking for a Bluechip contender, Something that you could purchase in Fund Manager size that still fills the criteria. My choice would be Reckitt Benckiser (RB.). Its products are all household names including Calgon, Vanish, Airwick, Dettol. Cillit Bang, Clearasil, Nurofen, Durex, Brasso, Cherry Blossom, Harpic ............ Its inflation proof and with all the money printing going on thats an important issue.
On fundmentals it offers over 3% dividend which has increased every year for the last 11 years. Same for Sales, Profits and EPS, each of then increase every year for the past 11 years. On the growth side the s/p has risen almost 400% in the past 11 years yet trades a a discount to its ten year average PER of 15.
Hard to better imo.

| Link | Share
harryr 10th Nov '12 26 of 47
2

Dettol, brasso,calgon can no doubt be found in Gran mothers house but not mine.
I see this week the LSE has published a list of the most shorted shares on the LSE.
A very large number of those companies are the High St names
This is the very market RB is selling its goods to.[not a good sign].
I have also noted the 3 year RB chart, if it does the same for the next 3 years expect the pe to be a lot lower than today.
Overall it sums up the very poor returns from FTSE 100 companies with that index still lower now that 12 years ago.

| Link | Share
djpreston 13th Nov '12 27 of 47

Ah Harry, I'm sure we would all have hated to hold RB. Or BAT. over the past 12 years...

Having said that, i wouldn't disagree with the notion that the telltale determines are now looking somewhat stretched.

Fund Management: European Wealth
| Link | Share

This thread is now closed. No new comments may be posted.



Stock Picking Tutorial Centre



Stock Picking Simplified

Stockopedia takes your stock picking to the next level with cutting edge Stock Reports & Screening tools.


Get started
or Take a Tour to find out more.
Join us at the London Investor Show next Friday at Olympia