Coca-Cola is one of the favorite investments of Warren Buffet. Company business is rock solid and growth prospects look fine. Valuation of the stock, in contrast, is not very attractive. We see intrinsic value of Coca-Cola shares at $33 a share, 20% below the share price. Buying a strong business is always a good idea, but buying it at an expensive price is not. In fact, Coca-Cola shares have not had a very impressive performance over the past decade, and this can be attributed to overvaluation rather than business performance.
KO – Coca Cola Intrinsic Value Chart:
On the chart above, an intrinsic value of the company is graphed against the stock price. Intrinsic value above the stock price usually points to undervaluation of the company shares. Intrinsic value below the stock price points to overvaluation of the company shares.