Jeff Pierce's  Instablog

By Dave Ambrose

Story Stocks - KOF

The stock I'd like to talk about today is something I pretty much stumbled upon, KOF. The ticker is for Coca Cola FEMSA, which is the largest bottler of Coke in Mexico. They supply Coke, something I simply cannot live without (or with but that remains to be seen), to Latin America and North America. To my knowledge, they do not supply any bottled beverages to Europe, which right now is a good thing.

Let's get right down to it. I love Coke, and what I love the most is how Coke used to taste back before they started using high fructose corn syrup in their formula. The stuff they make in Mexico is still made with cane sugar, which makes it taste less sweet and the carbonation seems much more severe to me, but that might be because it is bottled in glass. Either way, I don't care, it just plain tastes better to me than the stuff in the States. So I'm always looking for deals on it since I live in the Northeast and it's just not that common up here.

The stuff sells for an average of $2.50 a bottle on the Internet and that's not including the shipping. It's more common on the west coast to find the stuff since they are closer in proximity to the Mexican Border. So I'm innocently looking around online for pricing when I come across this article on KOF saying that they blew past revenue expectations. Well, being that I love a good story stock I researched the ADR and wow what a nice surprise. Looks like it handily outperformed KO last year and most of their stocks for that matter.

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When I read that article the price of KOF was $110, that's what I'll call my spot price, the price if a story stock when I "spotted" it. At the time of this article, one week later, it's sitting just south of $119. I'll let Jeff do what he does best and analyze the technicals, but I am seriously looking for an entry into this bottle rocket.

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To add to the story, I noticed it being carried in 3 large local chains this week, the Stop & Shop, the Big Y and the Home Depot, all local to me and all carrying my favorite drink at about $1.39 a piece. Great deal when you compare it with the Internet, but still steep for a Coke. But I don't care, to me it's heaven in a bottle and I would have paid the $2.50 each plus shipping if that was my only option.

So the story is this in a nutshell:

1. I like to buy stocks of the products I like, and I love Mexican Coke
2. It used to be tougher to get the soda up here in the Northeast and now I'm seeing it more and more
3. The sugar formula tastes better then the Corn Syrup version (again, to me)
4. The company has been on a growth tear and even with the light volume it's hard to argue with that chart
5. It has nothing to do with Europe
6. It does have something to do with Latin America (namely Brazil and Argentina and if countries were soda I'd drink those too!)

Dave Ambrose is an individual investor who found his niche in trading through researching stocks and basing his trading decisions on a company's story. Dave is also co-founder of the daily deals site helping traders get discounted trading tools - WallStDailyDeals.com