Opportunity in Coke

By Michael Gable 

Last week I observed how our market was not buying the dips as convincingly as before. As such, we have seen our market sold off heavily last Thursday and then underperform the US on Friday. Most people have been unable to explain why. Often it doesn’t take any specific reason to the get the ball rolling. The problem is that the herd mentality can kick in and people start selling because they see the market finally rolling over. Whether this happens or not remains to be seen, with yesterday seeing an intraday reversal in the market (albeit on low volume). However, we have to keep in mind that we could be finally seeing an inflection point in the market.

Coca-Cola Amatil ((CCL))

CCL is a fairly defensive company in that it is able to sell its goods regardless of the state of the economy – we just don’t need another summer with below average temperatures. The stock is also well diversified as they have the license to distribute premium beer products in Fiji, PNG, and NZ. They are also seeing strong momentum in Indonesia where the company is expected to grow at 6.8% next year and see its economy overtake Australia by the end of the decade. I personally feel that this Indonesian exposure is a big positive for CCL. At current prices the stock is paying a dividend at over 4% fully franked. Looking at the current price action, we should be able to get CCL at cheaper levels. The stock has broken a recent uptrend, and we can see that momentum was decreasing during the last drive up. You will also note that the recent move down is very impulsive compared to the move up so we are most likely going to see lower levels. There is strong support around $11.50 [blue line] but we will have to reassess once it gets down there. 
 

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Visit Michael Gable's website at  www.michaelgable.com.au/.

After leaving Macquarie Bank's Securities Group in 2008 after many years of service, Michael has gained a highly regarded reputation in the financial services industry. As a Private Client Adviser with Novus Capital, Michael has become a popular live commentator and analyst for Sky News Business Channel’s “Your Money, Your Call” program. He is also the author of the weekly stock market report “The Dynamic Investor”.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Michael Gable is an Authorised Representative (Rep. No. 376892) of Novus Capital Limited AFSL 238168 ACN 006 711 995. Michael Gable and Novus Capital Limited, their associates and respective Directors and staff each declare that they, from time to time, may hold interests in securities and/or earn brokerage, fees, interest, or other benefits from products and services mentioned in this website. This website may contain unsolicited general information, without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you must consider the appropriateness of the information in this website or the Product Disclosure Statement (PDS) or Financial Services Guide (FSG), having regard to your objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance. Michael Gable and Novus Capital Limited believes that any information or advice (including any securities recommendation) contained in this website is accurate when issued but does not warrant its accuracy or reliability. Michael Gable and Novus Capital Limited are not obliged to update you if the information or its advice changes. Michael Gable and Novus Capital Limited and each of their respective officers, agents and employees exclude to the full extent permitted by law, all liability of any kind, in negligence, contract, under fiduciary duties or otherwise, for any loss or damage, whether direct, indirect, consequential or otherwise, whether foreseeable or not, to the extent arising from or in connection with this website.

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