It Pains Me To Say This, But Coca Cola Looks Stagnant

It pains me to say this because Coca-Cola (NYSE: KO) is an iconic U.S. brand that is instantly recognizable and synonymous with American culture worldwide, but after a huge run over the past month or so, shares look overvalued. The recent surge has further accentuated the fact that shares are trading at a very expensive valuation for a company with little to no growth over the last few years, and at this point I view Coca-Cola as a hold rather than a buy.

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In a market where earnings multiples are getting a haircut in fast and dramatic fashion, you can make a case for owning the highest-growth companies at a price to earnings multiple of 30 times, meaning that a stock's market cap is worth 30 times the profit it earns in a year. Even many hardcore value investors can see the merit of buying a company like Alphabet (NASDAQ:GOOG) at 27 times earnings or the newly renamed Meta Platforms (NASDAQ:FB) at 24 times earnings. Unfortunately, Coca-Cola is not one of these hyper-growth companies, but 30 times earnings is exactly where it finds itself trading at after a 24% gain over the past year.

Source Fool.com