Entering text into the input field will update the search result below

Coca-Cola Consolidated: Stay-At-Home Business Is A Solid Buy

Alexander Veytsman profile picture
Alexander Veytsman


  • There are solid reads for Q1 from beverage companies, like PepsiCo, that indicate growing demand.
  • COKE's supply chain is in solid shape and stands ready to meet the growing demand.
  • Further, we believe there are margin opportunities for the company at this stage.

We say this upfront: Coca-Cola Consolidated (NASDAQ:COKE) should not be confused with Coca-Cola Company (KO), particularly since the market cap of the two is $2 billion and $195 billion, respectively. In our view, COKE doesn't get enough coverage, particularly at a time when the beverage business is seeing a coronavirus-driven resurgence. We are thus affirming our Buy thesis on this name and discussing key tailwinds below:

Why We Are Bullish:

Stay-at-home business is a major tailwind: With the majority of the US population increasing their non-alcoholic beverage consumption in the aftermath of the stay-at-home policies, we believe that the producer and distributor, such as COKE, is going to receive its share of demand, particularly since it is directly tied to The Coca-Cola company and Dr. Pepper, two of the most in-demand brands in the US. By some estimates, beverage volumes were up as much as 9% Y/Y in April.

PepsiCo earnings provide a solid read: Per PEP's earnings, we are seeing a direct positive impact of the coronavirus situation, since March figures were stronger than either February or January, growing in upper single digits. We are seeing a beverage surge in deliveries, both from local restaurants that try to stay afloat and in bulk from Costco and other mass merchants. (We are using PepsiCo as a read-through because its business is various close to that of Coca Cola).

Supply chain remains sound: In light of the nature of the virus outbreak, there is always a concern that the production and distribution could be disrupted as a result of some employees getting sick. To the best of our knowledge, we haven't heard of any disruptions and, had their been material impact, believe that the company would have released such information ahead of its earnings call on May 5. There is a broader issue: if COKE has enough employees

This article was written by

Alexander Veytsman profile picture
Alexander Veytsman's areas of expertise are long/short equities, as well as the macroeconomic trends of the US economy. Opinions expressed in the published articles are exclusively his own, and not affiliated with any company.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You


Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.