Coca-Cola Hits 52-Week High on Rumors of Going Private - Analyst Blog

The Coca-Cola Company KO hit a 52-week high of $41.57 on Jun 18 after rumors spread about it going private.

Reports of a possible takeover of the cola giant by billionaire investor Warren Buffet's company, Berkshire Hathaway, Inc (BRK.B) sent the company's share price higher. Berkshire Hathaway is the largest shareholder of Coca-Cola.

David Winters, chief executive and portfolio manager of Wintergreen Advisers, another stake owner in the U.S. drinks company, reportedly wrote to the company's board that he feared that Buffet was plotting to take the company private in a “sweetheart” deal. However, Buffet denied the allegations saying that there is “absolutely no chance” of buying Coca-Cola.

Coca-Cola shares also gained momentum on Jun 18 after Reuters reported that the company plans to start production at five factories in Egypt and Pakistan over the next year and a half. The effort is expected to grow sales in double-digit percentage range in both the markets this year.

Coca-Cola's Middle East and North Africa president told Reuters that the company plans to open three plants for sparkling drinks in Karachi, Multan and Islamabad in Pakistan. The other two factories will be opened in Egypt over the next 18 months.

Coca-Cola products enjoy stronger demand in emerging and developing countries which help it offset softer demand in the developed ones. Coca-Cola is showing keen interest in countries like Latin America, India, Russia and China, encouraged by growth opportunities that these countries provide. In 2013, around 60% of the company's revenues were generated outside the U.S.

In India, Coca-Cola has already invested over $2 billion in the last 18 years with plans to invest another $5 billion by the end of 2020 to build consumer marketing, infrastructure and brands in the country. Further, Coca-Cola plans to invest $8 billion in China over the next six years to build plants, distribution, coolers, brands and equipment. The Cola giant also plans to invest $3 billion in Russia between 2012 and 2016, $8 billion in Brazil through 2016 and $300 million in Vietnam between 2012 and 2015.

Other Stocks to Consider

Coca-Cola carries a Zacks Rank #4 (Sell). Better-ranked beverage stocks include The WhiteWave Foods Company WWAV andDr Pepper Snapple Group, Inc. DPS. Both the companies carry a Zacks Rank #2 (Buy).