Coca-Cola is unquestionably one of the most – if not in fact the most – recognizable brands in the world. Still, like everything it seems that there is a time to reap and a time to sow. So let’s look at two upcoming periods that have witnessed very divergent results for KO stock.
(See also The Best Bear Market Strategy)
The Fourth Quarter “Fizz”
This favorable period extends from the close on the 12th trading day of October through the 19th trading day of November. Figure 1 displays the growth of $1,000 invested in KO stock only during this period starting in 1989.
Figure 1 – Growth of $1,000 invested in KO during seasonally favorable 4th quarter period
For the record:
*This period has showed a gain 22 times (82%)
*This period has showed a loss 5 times (18%)
*The average gain = +6.8%
*The average loss = (-1.7%)
*The largest gain was +30.5% in 1999
*The largest loss was (-3.1%) in 1993
The Fourth Quarter “Fizzle”
This unfavorable period extends from the close on the 17th trading day of December through the 20th trading day of January. Figure 2 displays the “growth” of $1,000 invested in KO stock only during this period starting in 1989.
Figure 2 – Growth of $1,000 invested in KO during seasonally unfavorable 4th quarter period
For the record:
*This period has showed a gain 5 times (18%)
*This period has showed a loss 22 times (82%)
*The average gain = +2.4%
*The average loss = (-4.6%)
*The largest gain was +6.4% in 1996-1997
*The largest loss was (-11.4%) in 2002-2003
Summary
Will these trends hold up this time around? Ah, there’s the rub. As with any seasonal there are never any guarantees “this time around”.
Still, as the old saying goes – well, sort of paraphrasing here – 82% accuracy is 82% accuracy.
Jay Kaeppel
