January 7, 2012

Is it time to buy Coca-Cola again?

It is always hard to choose which stocks to invest in, should you invest in the stocks who grow fast, the ones with the highest dividend yield, or all of them in an index fund? From an historical point of view, big companies with a solid track record, such as Coca-Cola, have always been a good investment. Is it time to invest in these big companies again? Tom Stevenson, in an article from The Telegraph, argues it is. These are the seven arguments:
  1. They are a safe haven (a place where you can invest with a very small risk). Government bonds used to be a safe haven, but who would like to invest in these when all the governments around the world are increasing their debt? It seems like the US debt ceiling is increasing each month.
  2. They have a better pricing power than their smaller counterparts
  3. Have a stronger balance sheet compared with smaller companies. Smaller companies will have more trouble to borrow money if the economic situation is worsening 
  4. Are paying a dividend which is always nice of the price of the stock is falling
  5. Are not dependent on one market. Big companies are selling their products all over the world
  6. Are more diversified. Big companies are selling more than one product
  7. They look cheaper compared to smaller stocks
Source: The Telegraph