The Coca-Cola Company (KO): 1 of Buffett’s Biggest Investments Might Be His Worst

Foolish conclusion
In 1998, Buffett looked like a genius for buying Coke stock when he did. In 10 years, Coca-Cola had returned more than 1,000%. That strong initial performance makes Coca-Cola look like a good performer in Buffett’s portfolio when considering the full 25-year holding period to date. Yet the stock has been a dud for the past 15 years, drastically underperforming the S&P 500 and offering a total return of approximately 2% annually.

Looking forward, I don’t think the next decade will be much better than the last one for The Coca-Cola Company (NYSE:KO). Coke stock currently trades at 20 times earnings, which is fairly pricey considering that analysts are expecting earnings growth in the high single digits for the next few years. Sugary beverages are no longer a growth product. If anything, the rise in health consciousness (and anti-soda campaigns such as Michael Bloomberg’s crusade in New York) will cause a slow decline in demand for Coca-Cola’s products. Thus, Coke may continue to be an underperformer in Warren Buffett’s portfolio for the foreseeable future.

The article Coke Stock: One of Warren Buffett’s Biggest Investments Might Be His Worst originally appeared on Fool.com.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway, Coca-Cola, and Wells Fargo and owns shares of Berkshire Hathaway and Wells Fargo.

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