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The Coca-Cola Company (KO)

Coca-Cola stock forecast: buy or sell

Close on Oct 23rd, 2020
$50.52 -0.32%
3 months performance
5.40%
Published: October 25th, 2020 - 5.13pm EDT

Coca-Cola stock outlook

  • Coca-Cola closed on Friday at $50.52 after barely changing a -0.32%.
  • On Thursday, Coca-Cola released its Q3 earnings report
  • Morgan Stanley and UBS Group posted strong positive ratings for Coca-Cola on Friday, with an average target of $57.00
  • Price is drawing a scaled uptrend since last March with higher tops and higher bottoms. Up to date, shares marked a 41.71% gain since the beginning of this rally
  • The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide.

Please read:
The viewpoints expressed in this article are personal and not recommendations for you to buy or sell shares. The author of this report does not have an understanding of the particular circumstances of the reader, his or her finances or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Comments are posted for learning purposes only

Coca-Cola stock charts

Should I buy Coca-Cola stock?

Even if you are a experienced or a novel trader, best trading results come from using an investing strategy that never leaves to random or subjective opinions when is the best moment to buy or sell stocks. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is $KO stock a buy?

In the current situation of Coca-Cola there is just one buy setup eligible:

Uptrend buy setup

Coca-Cola stock is in an uptrend since last March that so far has marked an amazing 42% gain. Price marked a pull back in this uptrend at $47.56 in late September, and since then it bounced off a 6.22%. Breaking out over $51.72 - it's last top - will be a good entry point if Coca-Cola resumes the uptrend. If you decide to enter this trade, the suggested stop loss is at $46.55

Buy setupBuy pointStop lossRisk
Uptrend buy setup$51.72$46.5510%

Should I sell Coca-Cola stock?

When is it time to sell Coca-Cola?. As when we have to buy shares, deciding when is appropiate to sell is not a haphazard decision, and we must use our own trading style. Our trading system selects very simple setups to guide us on when is the best time to sell a stock. Be aware that these setups are not intended for shorting Coca-Cola stock

As a rule of thumb, you should never mantain an open trade that produces losses greater than those expected at the time of purchase. The timing to sell shares always has to be dictated by the stop-loss (automatic or manual)

Is it time to sell Coca-Cola stock?

In the current situation of Coca-Cola there is not any eligible sell setup, so Coca-Cola stock holders with operations in profit can keep their positions

Analysts' recommendations to buy or sell Coca-Cola stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last month, 2 brokerage ratings were published for Coca-Cola. General sentiment is bullish, with 2 out of 2 publishing positive outlooks

Coca-Cola ratings

Brokerage firmRating
Oct 23rd, 2020
Morgan Stanley Buy
Oct 23rd, 2020
UBS Group Strong buy

Technical analysis

Coca-Cola stock started an uptrend last March, and gained an amazing 41.71%. During this uptrend, the price provided some buy points on the breakouts. Latest pullback was in late September, when price bounced at $47.56. Like in all uptrends, price needs to rest and now price is moving in a range between $51.72 and $47.56

SMAs overview

A favorite tool of many technical analysts are the moving averages, that easily show trend momentum. A moving average is the average price of a stock over a set period of time. Moving averages are usually calculated on different periods depending on the trading timeframe 21, 50, 100 and 200 days are the most usual moving averages

KO SMAs chart

Supports and resistances

Market investors use support and resistance levels to find price points in the stock price action that may work as glass ceiling, preventing the price of shares to move up or down. A support level is a level where the price tends to stop as it falls. This means that the price is more likely to "rebound" this level rather than break through it. However, if the price breaks down this level, it will probably continue declining until finding another support level. On the other hand, resistances are where the price tends to find a curb as it moves up. Likewise, this means that the price is more likely to "bounce off" at this level, and if it finally breaks this level, it will rally more easily until it finds the next resistance

The current resistance levels are:

  • R1: $51.09 (1.13% above)
  • R2: $51.72 (2.38% above)
  • R3: $52.64 (4.2% above)
  • The current supports are:

  • S1: $50.38 (-0.28% below)
  • S2: $49.89 (-1.25% below)
  • S3: $49.36 (-2.3% below)
  • Bollinger bands

    The so-called Bollinger bands are a widely known studio that was created by John Bollinger. In essence, the Bollinger Bands are lines that fluctuate around a centralmoving average, varying the distance from the bottom to the top depending on market volatility. They are usually drawn by an offset of two standard deviations, above and below, from a moving average line. Bollinger himself recommends the moving average period to be 20

    The evolution of the Bollinger Bands on the chart shows that they are relatively narrow (4.85%), which clearly indicates that price volatility is low. Reduced volatility is often the antecedent to a sudden movement (up or down), so we must be alert and manage our buy or sell orders properly

    KO RSI chart

    Relative strength index

    The relative strength index (RSI) is a technical indicator used in the analysis of stock markets. Its objective is to chart the current and previous weakness or strength of a stock or market based on the closing prices of a recent trading period. Oscillator indicators, such as relative strength, are intended to indicate values in the range of 0-100. The relative strength indicator is one of the best known and most widely used indicators, invented by J. Welles Wilder in the late 1970s

    The RSI dropped below the overbought level of 70 in early September after just crossing to the overbough zone for just one day (weak signal). The RSI reading on Friday was 56.28. Since RSI lost the overbought zone, Coca-Cola shares merely moved a 0.51%

    KO RSI chart

    Earnings and financials

    The Coca-Cola Company ($KO) came out with fiscal third-quarter earnings of $0.55 per share on Thursday, significantly surpassing the Market consensus estimate of $0.46 per share. This quarterly report represents an earnings surprise of 19.57%. Turnover was $8.7 billion in contrast to $8.4 billion estimated by analysts.

    Compared to the same quarter last year, EPS was $0.56, so posted EPS means a loss of -1.79%. Looking at revenue, figures fell a -8.99% compared to $9.5B same quarter last year.

    Coca-Cola ($KO) posts quarterly financial report next January 2021.

    KO revenues and profits chart