International Trade: Coca-Cola Stock Analysis
Trading Project Information
The goal is to place you in the position of portfolio managers who invest in companies linked to international trade. Each student will manage an imaginary amount of capital which will be invested in a stock. You may invest in a Canadian or foreign company. Make sure the company you buy has profits linked to international trade. A number of sites for obtaining free stock quotes are found below. If you invest in a foreign company you will need to convert Canadian dollars to a foreign currency to make your purchase. An internet site for exchange rate quotes as well as information on converting currencies is found below. Using microeconomic models taught in the course as well as current events you must analyze the economy and financial markets to derive trading strategies for stocks. The amount of capital to be invested is one million Canadian dollars. Stock prices respond to expected profits. If something happens that may raise a company’s profits its share price rises immediately. Likewise If something happens that may lower a company’s profits its share price falls immediately. For example, if oil prices rise the oil companies will have greater profits so their share prices rise. Microeconomic events like product development and changes in demand or costs affect profits and therefore stock prices. Your task is to link microeconomics with investment decisions. You do not need any finance background to make sound trades. A report must be submitted at the end of the term describing the overall strategy and reasons for key trades. It should include statements of trading profits/losses in Canadian dollars. Analyze why the stock price changed in response to changes in trade policies of countries or market conditions. Excluding references the report should be no more than 3 single spaced pages in length. It is possible to obtain capital gains by trading stocks at high frequency. The goal is keep informed of price movements in financial markets and current events such as the USChina trade war to ensure the best possible trades. To make the project manageable write up the reasons for trades and the results as they occur instead of waiting to the end of the course to compile results. The grade will be determined by the quality of analysis rather than overall profitability. The point is to apply the economic models taught in the course to motivate the purchase of companies heavily involved in international trade. Using current events and 1 microeconomic analysis predict stock price movements. Microeconomics affects asset prices so the objective of the project is to use Microeconomics models to construct investment portfolios. When a trade generates a loss the goal is to explain why it happened using the models. Analyze why the stock price changed in response to changes in trade policies of countries or economic conditions. For instance, suppose the release of trade data causes depreciation of a stock you are holding. Explain why the data caused the price fall and why this did not conform to previously held expectations. High quality analysis will generate a high grade.
Coca-Cola Stock Analysis
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Coca-Cola Stock Analysis
Coca-Cola, a multinational beverage corporation, produces soft drinks, bottled water, and juice. Due to the adaptation to the consumer preference dynamics, the company’s strong performance is fueled by diversifying its product portfolio to include healthier beverage choices, such as bottled water and juice, which has helped offset declining soft drink sales. Stash (2017) indicates that Coca-Cola Inc. provides about 4,000 drink selections through its 500 brands. The company possesses four of the world's top five sparkling non-alcoholic beverages: Coca-Cola, Diet Coke, Fanta, and Sprite. The Coca-Cola brand is one of the most recognizable globally, with more than 94% of the global population recognizing the red and white logo. Diet Coke is a sugar and calorie-free variety of the company's namesake product, while Coca-Cola Zero Sugar is another sugar-free substitute. Sprite is the global leading lemon-lime-flavored soft drink, and Fanta is a fruit-flavored brand that sells a variety of flavors. The company also owns several water brands, including SmartWater and Dasani, which is among Coca-Cola's 21 billion-dollar brands (The Coca-Cola Company, n.d.).
Coca-Cola Inc.'s stock performance has been relatively strong in recent years. The company's share price has increased by averagely of 5% annually in the past five years, notwithstanding challenges such as declining soft drink sales and increasing competition from healthier beverage options. Coca-Cola also reports a 7% organic revenue growth compared to the 4% to 5% per share growth (Gulliver-Needham, 2023). One of the reasons for Coca-Cola's strong performance is its aptitude to acclimatize to fluctuating consumer preferences. The establishment has differentiated its product portfolio to include healthier beverage options, like, bottled water and juice, which has helped to offset declining soft drink sales. For instance, Coca-Cola has faced challenges acquiring the sports drink BodyArmor, as the brand’s sales declined in the latest quarter, and the corporation's U.S. sports drink market share slipped. This decline was attributed to the integration of BodyArmor with Coke's other sports drink, Powerade, which resulted in "hiccups" (Maloney & Seal, 2023). Still, Coca-Cola's global returns increase in the latest quarter was fueled by value increases and changes in package sizes and retail sales channels. The firm also expected sales growth to slow in 2022, having projected organic revenue growth at 7% and 8%, down from 16% in 2021. Coca-Cola's global sales volume also slid by 1%, largely due to the suspension of operations in Russia (Maloney & Seal, 2023).
Coca-Cola inc.'s global operations have also spurred its strong performance. The corporation's international-market revenues have risen by an average of 3% per annum over the past five years, driven by strong demand in emerging markets such as China and India (ILO, 2022). Coca-Cola has also profited from auspicious exchange rates, furthering its worldwide revenues. Its foreign operations have still shown solid potential for growth, even during the global pandemic. As more consumers turn to familiar and comforting products during times of uncertainty, Coca-Cola saw a heightened demand for its products internationally. Besides, the corporation’s focus on product innovation and marketing has helped it to stay relevant and attract new consumers in international markets. For example, the company's introduction of new flavors and healthier options, such as Coca-Cola Zero Sugar, has helped to appeal to a wider range of consumers. Covid-19 had a significant impact on Coca-Cola's business. The company's sales dropped by 5% in the last quarter of 2020, as the pandemic led to the closure of restaurants, bars, and other settings where Coca-Cola's products are sold (Rocco, 2021). Yet, the company's performance has been better than many of its peers, as it has offset some of the declines in sales through cost-cutting measures and a shift to e-commerce.
Despite the challenges posed by Covid-19, Coca-Cola's stock remains an attractive investment option. In its 2022 “World Employment and Social Outlook” report, the ILO indicates that the COVID-19 crisis pushed many corporations to unexpected bankruptcy and workers into unexpected poverty (ILO, 2022). The company's resilient brand, diversified product portfolio, and international operations make it well-positioned to weather the current crisis and continue to generate strong returns for investors. Coca-Cola’s diversified product portfolio, international operations, and strong brand have helped it to weather the current crisis and continue to generate strong returns for investors. This is reflected in the company's earnings estimates, with the Zacks Consensus Estimate for the current quarter at CAD 0.64 per share, representing n...