The Coca-Cola Company (KO)’s Enormous China Potential

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Coca-Cola will be a key beneficiary of McDonald’s expansion in China since it is the soft drink supplier for each McDonald’s location. As the Chinese continue their love of American products, McDonald’s and Coca-Cola make a great partnership and help each company target the Chinese consumer. As McDonald’s continues to expand in China, it naturally increases Coke’s awareness in the country and gives Coca-Cola an even stronger presence in China.

Foolish assessment

In looking at the financials, we see a very well-run company. The company’s current operating margin is approximately 23.2%, and the stock trades at a forward P/E of 18. Even with the stock at a 52-week high, the current dividend yield of 2.6% is better than 10-year Treasuries.

The Coca-Cola Company (NYSE:KO) is a great company, and as Chairman and CEO Muhtar Kent said about China:

“As one of the only true multi-category beverage players in China, the measure of our success will be how we grow our total business between now and 2020 versus our growth in any particular quarter. Clearly, I think, with the consumer fundamentals and our strong position in China, we’re just getting started.”


I agree with his assessment and see China driving growth for Coca-Cola and its share price. Coca-Cola is a great way for investors to play the amazing growth story that is China. Over the last 50 years, investors have continued to question when Coke’s amazing run will end. The stock has continued to outperform its peers and has been one of the best stocks to own for the past five decades. With China growing, the next 50 years look bright for Coca-Cola and its shareholders, as well.

The article Coca-Cola’s Enormous Potential in China originally appeared on Fool.com and is written by Mark Yagalla.

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