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Jones Soda: The Long Case, and a Threat to Coke and Pepsi

If you have millions, can you construct a plant, create various sodas and start selling them? If the answer is yes, then why would you pay more than book value($1.15) for Jones Soda, when you can do it yourself?

Can you create Pepsi? Probably not, then buy it when it's at 15Pe

Anyone Want a Cheap Coca-Cola?

Ko valuation:

Operating Income After Tax Per Share: $2.36
Cash + Investments - LT Debt Per Share: $7
Tangible capital: $0
Earnings future growth = Gdp growth: 6%
Value = $69 assuming it grows 6%
Value = $57 assuming it grows 5%

When to Sell: Coca-Cola

Dividend growth investor my intention wasn't to be rude, I apologize if you interpreted it that way. I will rephrase my words from now on.

What I wanted to say is that MO can't have same enterprise value as KO, since demand for KO (and beverages in general) is increasing and for MO (and for tobacco) declining and the beverage industry is not oversupply so KO has better economics and would demand a higher enterprise value than MO.

That's why KO had a higher return than MO since the day that the article was posted Jan 30, 2007.

Todd Su the article was posted in 2007 not in 1998. In 1998 MO was definitely the best option since KO was trading at over 40 PE.

When to Sell: Coca-Cola

Whoever reads this don't pay attention to it. Coke appreciated 20% the following year after this report was written against a 13% decline of Altria (Marlboro).

Why? Both companies were trading about the same PE if you add cash and investments and substract debt. But unit volume growth for Altria was negative and for Coke +4%.

Does it make sense to you to pay the same for a company that is declining against another one that is increasing when both have huge returns on capital (such that little or no money is needed to achieve growth)? Ask yourself.