Question regarding investing in the stock market?

I am interested in investing in Coca Cola and Exxon Mobile.
My question is what are some risks in investing in Coca Cola and what are some risks in investing in Exxon Mobile?

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This entry was posted on Saturday, August 21st, 2010 at 6:59 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “Question regarding investing in the stock market?”

  1. Both of these stocks typically fall under the category of cyclical stocks. Which means that perform better/worse at certain times of the year. Both of these stocks are excellent choices for LONG term investments (holding at least 2 years). If I had to pick one for LONG term. . . . . . Exxon.

  2. perplexing_questions on August 21st, 2010 at 7:56 pm

    a good solid long term investment would be for KO but if your looking for a more fluctuating stock go with Exxon. . its not that liquid but more so than KO

  3. Al Qaeda may put 1,000 Coca-Cola cans at 1,000 Wal-Marts all over the World with poison and 1,000 will be dead and nobody would drink Coca-Cola ever again and you will lose at least 10% of your money (If you have a Stop Order at 10%)

    Buy “Chain Reaction” starring Academy Award Winner Morgan Freeman.

  4. I would say that both companies are solid companies and have survived some very turbulent sectors. All the information below is corrected for splits.

    Exxon Mobile of course is at risk to political unrest around the world. Its products are particularly politically sensitive. Windfall profit tax, raw materials coming from the Middle
    East and other politically volatile countries, and environmental concerns are all risk factors. Currently, the trend is carbon tax or increased regulation of some sort on carbon emissions, this could hurt Exxon Mobile. However, they have managed most of that sensitivity in the past quite well.

    Their stock price under the ticker symbol XOM has tripled over the 10 years and over the last two years it has grown almost 50%. Its PE is low.

    Coca Cola (KO) has not had the steady price appreciation that Exxon has seen. Infact the price peaked in August of 1998 and has never reached that level since. However in the last two years the stock price has grown 25%. The primary threat to Coke is the nature of their business; the consumer is fairly sensitive to fads. In the past Coke has responded well to these swings in consumer preference. Their earnings per share decreased this last year, however their return on equity is good.

    Both companies have had their dividends grow at a steady rate. With Bush’s tax package on dividends this is good. Both companies’ dividends are qualified dividends or have special tax advantages. Currently Coke pays $1. 36/share in dividends which is over 2. 5%. But more than the level is that over the last 10 years the divdend level has increase approximately 7% per year. That is wonderful. Exxon has had similar growth in dividends over the last 10 years. Their dividend is only paying $1. 40/share or about 1. 7%. But again their dividends have increased about 5% per year.

    If you are wanting companies that are solid long term companies, these two qualify. Exxon adds the potential for great price appreciation, but probably has more political risk. Coke is probably more sensitive to competition and consumer preferences.

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