The Misfits: Coca-Cola Consolidated (COKE)
No, not that Coca-Cola, the other Coca-Cola.
Coca-Cola Company (NYSE: KO) has received much attention in the financial blogosphere in the past several months. Between people falling over themselves to praise Warren Buffett for his investment in Coca-Cola to the Bear Cave recently issuing as close to a short report as you can make on a solid albeit overhyped business, there is a wide variety of opinions out there.
I can’t say I have a strong opinion one way or the other on Coca-Cola. It has been underperforming the market for more than 30 years. Sure, people made money, but it hardly seems worth it to take on the additional risk of owning equity in a single company that underperforms a diversified index over such long periods.
But we’re not here to talk about that Coca-Cola.
There are lots of industries where the companies in the background are the ones that make better investments than the big recognizable companies: Automotive and airlines are two examples that immediately come to mind. Beverages and beverage distribution are, arguably, another example of this. Coca-Cola Consolidated (NASDAQ: COKE) is the largest bottler and distributor of Coca-Cola products in the U.S. and is the only publicly traded one. It has generated returns more than three times that of Coca-Cola over the past 30 years.
However, Coca-Cola Consolidated’s outperformance hasn’t always been the case, so let’s dig into what has made the beverage distributor such a lucrative business.
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