{"id":150180,"date":"2010-01-07T14:25:00","date_gmt":"2010-01-07T19:25:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/dont-buy-gold-buy-coke-2010-1"},"modified":"2010-01-07T14:25:00","modified_gmt":"2010-01-07T19:25:00","slug":"who-needs-gold-as-an-inflation-hedge-when-youve-got-coke","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/150180","title":{"rendered":"Who Needs Gold As An Inflation Hedge When You&#8217;ve Got Coke?"},"content":{"rendered":"<p><img decoding=\"async\" class=\"float_right\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4a9e6ded20e9e05d48542805&amp;maxX=400\" border=\"0\" alt=\"coke coca cola\" width=\"400\" \/><\/p>\n<p><div style=\"float: left; padding: 15px 15px 15px 0;\">\n<script type=\"text\/javascript\">\/\/ <![CDATA[\ntweetmeme_source = 'moneygame'; tweetmeme_service = 'bit.ly';\n\/\/ ]]><\/script><br \/>\n<script src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\" type=\"text\/javascript\"><\/script>\n<\/div>\n<p>Worried about potential dollar devaluation and future inflation, but skeptical about the most recent gold run-up?<\/p>\n<p>In case you missed it, there are &#8216;real&#8217; assets everywhere to invest in, beyond the yellow metal. Some of them actually represent growing streams of real cash flow. They&#8217;re called defensive consumer businesses.<\/p>\n<p>Take Coca-Cola for example. They have one of the most powerful, best recognized brands in the world selling a simple sugary beverage which even the poorest know and buy. They&#8217;ve been able to increase sales and earnings pretty consistently over time, and one imagines that whatever a dollar could be worth in the future, whatever the inflation, Coke will simply charge their cost of production plus a profit margin for their products. Assuming they could maintain their brand of course, but it&#8217;s not like the beverage industry would end.<\/p>\n<p>Coke&#8217;s business has proven itself able to keep ahead of inflation. Coke&#8217;s sales per share have risen from $7.06 in 2001 to a $13.85 estimate for 2010 according to Value Line. That&#8217;s 7.8% growth per year, well ahead of inflation. Earnings per share have risen at an 8% compound annual growth rate over the same period as well. All the while, the company has been paying a dividend, and this has grown as well. Coke could pay $1.76 in dividends per share during 2010 compared to $0.72 back in 2001, which equates to 10.4% compound annual growth since.<\/p>\n<p>Yet interestingly, the market hasn&#8217;t cooperated. Gold prices have shot up like crazy since 2001, but Coca-Cola (KO) shares trade for $56 &#8212; <em>less<\/em> than they cost back in January 2001 when they went for $62 and earned far less per share. (Meaning Coke&#8217;s at a pretty low price to earnings valuation vs. where it&#8217;s been historically.) That&#8217;s sad news for past Coca-Cola investors, but great news for prospective ones. We&#8217;d personally lose far less sleep owning Coca-Cola over gold.<\/p>\n<p>More broadly, it doesn&#8217;t just have to be Coke. Businesses like Coca-Cola, with strong consumer brands, low tech, and regular habitual consumption are generally inflation-protected. It&#8217;s hard to imagine how these kinds of companies won&#8217;t be even larger than they are today,in ten years. Worst case, KO&#8217;s now paying a historically high 3% to wait.<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b4623ac00000000006fc877\" border=\"0\" alt=\"Coke Earnings\" width=\"350\" \/><\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b4633ec0000000000496bba\" border=\"0\" alt=\"Coke Earnings\" width=\"350\" \/><\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b4634270000000000811cd3\" border=\"0\" alt=\"Coke Earnings\" width=\"350\" \/><\/p>\n<p><em>The author doesn&#8217;t own shares of Coca-Cola. All data and estimates taken from Value Line.<br \/><\/em><\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/dont-buy-gold-buy-coke-2010-1#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/gartman-dont-be-fooled-buy-gold-in-euros-and-other-currencies-2010-1\">Gartman: Don&#8217;t Be Fooled, Buy Gold In Euros And Other Currencies<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/china-will-control-the-gold-market-in-2010-2010-1\">How China Will Blow Past India And Control The Gold Market In 2010<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/10-commodities-that-kicked-golds-ass-in-2009-2010-1\">11 Surprising Commodities That Kicked Gold&#8217;s Ass In 2009<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/silbE-tl1UI\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Worried about potential dollar devaluation and future inflation, but skeptical about the most recent gold run-up? In case you missed it, there are &#8216;real&#8217; assets everywhere to invest in, beyond the yellow metal. Some of them actually represent growing streams of real cash flow. They&#8217;re called defensive consumer businesses. Take Coca-Cola for example. They have [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-150180","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/150180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=150180"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/150180\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=150180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=150180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=150180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}