Thursday, October 16, 2008

Louis Navellier, Coca Cola and Fundamentals

Today I would like to post a personal thought about this topic.

Yesterday Mr. Navellier wrote to his Blue Chip Growth and Emerging Growth what he considers an important lesson in these days. The only company with positive price change in the Dow's 30 was Coca-Cola (KO). The reason is that Coca-Cola announced that its earnings were up 14% over last year, and it beat Wall Street expectations by about 4%. So, continues Mr. Navellier, it looks like the fundamentals are back in focus after all!

The Mr. Navellier adds that we can do MUCH better than Coke. His Blue Chip or Emerging Growth companies are carefully chosen (he claims). Ten he adds that obviously, many of our stocks do much better than that! although looking at his portfolio does not look like.

And finally he closes saying that if Coca-Cola can be up in a day like that, you can imagine how our stocks will perform in the coming weeks.

The fact is that Coca-Cola is a monopoly. It has a sustainable competitive advantage (secret formula). It is global and people want to drink Coca-Cola. In addition to that, in bad economic times people may not buy new Mac computers or will postpone the upgrade to the latest Blackberry, but they will still have a Coke at Mc.Donald's.

You cannot copy Coca-Cola. Even with a lot of money and the best managers on earth, you will never be able to replicate its success and to gain market shares.

Coca-Cola is a de facto monopoly. Navellier's stocks aren't.

1 comment:

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