How to Put the Fizz Back in Coke (Part 1)

  • SumoMe

Please see also What I Learned from George

As the world’s leading purveyor of sugar laden drinks (and coincidentally also the purveyor of one of the most effective products in the world for cleaning up at a crime scene, but I digress), Coca-Cola is under attack these days.

The next sentence usually starts with the phrase “As Americans become more health conscious…….yada yada”.  Har.  What it should say is something more like “as America comes to grips with the fact that it can’t get itself off of its collective couch, it actively seeks to blame someone other than itself by scapegoating the companies who produce the products that they can’t bring themselves to stop consuming.  For example, I believe that if only that Dairy Queen near my house didn’t exist I would be a picture of health! (Never mind that I go into serious withdrawal when the store closes for the winter months).

Anyway, my point is that it’s tougher to make money in KO than it used to be.  In Figure 1 you see a chart for KO going back to 1975.  After hitting an adjusted low of $0.56 a share in 1981 the stock then advanced to $44.47 by July of 1998.  That’s a gain of 7,859% for those keeping score at home.  Over the past 17 years the stock has gone, essentially nowhere.  After hitting lows under $19 a share in 2003 and 2009 the stock finally rallied to a new all-time high in October and November of last year.  And I hope you enjoyed it because the stock is now back around $40 a share.1Figure 1 – KO: A Tale of Two 17-Year Periods

So like I said, KO isn’t quite the “sure thing” it used to be.  Or is it?  Now granted there are no “sure thing” ways of trading anything.  But there are some that can be pretty darned consistent regardless of what is going on in the market.  Let’s take a closer look at KO stock.

Seasonal Trends in KO

Bullish Trend #1: March Trading Day #10 through June Trading Day #2

This trend involves buying shares of KO at the close of the 10th trading day of March and selling at the close on the 2nd trading day in June.  Figure 2 displays the growth of $1,000 invested only during this time period starting in 1982 through 2015.2Figure 2 – Growth of $1,000 invested in KO only between March Trading Day #10 and June Trading Day #2; 1982-2015

For the record:

*This period showed a gain 26 times

*This period showed a loss 8 times

*The average gain was +10.1%

*The average loss was (-2.2%)

The Year-by-Year results appear in Figure 3

Year %+(-)
1982 6.2
1983 9.6
1984 3.6
1985 9.0
1986 4.8
1987 (9.2)
1988 (1.6)
1989 18.2
1990 28.5
1991 4.9
1992 8.8
1993 (1.5)
1994 (0.0)
1995 7.0
1996 14.1
1997 14.1
1998 12.8
1999 (1.2)
2000 21.2
2001 (0.2)
2002 12.8
2003 15.6
2004 7.2
2005 5.8
2006 2.5
2007 11.9
2008 (1.9)
2009 20.5
2010 (1.8)
2011 3.3
2012 4.9
2013 6.2
2014 7.1
2015 2.6

Figure 3 – Year-by-Year KO performance March Trading Day #10 through June Trading Day #2

Summary

Now your first reaction might be to say “Gee, thanks Jay for telling me about this trend the day AFTER it is over for this year.”  OK, not exactly timely reporting on my part.  But, hey, there’s always next year (Take it from me, I’m a Cubs fan).  And the year after that.  In Part 2 I will highlight another seasonally favorable period that you might still be able to take advantage if this year.

Jay Kaeppel

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