What’s Next For Coca-Cola Stock After Its 6% Rally?

by Trefis Team
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Coca-Cola stock (NYSE: KO) has increased 6% in the last three months and is currently trading at over $54 per share. The rally was driven by the Fed’s stimulus package and measures announced by other economies. The gradual lifting of lockdowns and successful vaccine rollout has further enthused markets in anticipation of faster economic recovery. Sales in take-home channels continue to outpace other channels, but the company is seeing improvement in on-premise selling channels as Covid-related restrictions are being gradually lifted. Also, with entertainment venues, sporting events, etc. likely to begin ramping up in the coming months, anticipation of sales likely to pick up further in the next few quarters has also added to the recent stock rise. But will KO stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for KO stock average around -1% in the next three-month (63 trading days) period after experiencing a 6% rise over the previous three-month (63 trading days) period.

But how would these numbers change if you are interested in holding KO stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test KO stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF KO stock moved by -5% over five trading days, THEN over the next 21 trading days, KO stock moves an average of close to 3 percent, with a 78% chance that the company’s stock will give a positive return.

Some Fun Scenarios, FAQs & Making Sense of KO’s Stock Movements:

Question 1: Is the average return for The Coca-Cola Company stock higher after a drop?

Answer:

Consider two situations,

Case 1: The Coca-Cola Company stock drops by -5% or more in a week

Case 2: The Coca-Cola Company stock rises by 5% or more in a week

Is the average return for The Coca-Cola Company stock higher over the subsequent month after Case 1 or Case 2?

KO stock fares better after Case 1, with an average return of 2.8% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of -0.9% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how The Coca-Cola Company stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold The Coca-Cola Company stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For KO stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

KO’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for The Coca-Cola Company stock by changing the inputs in the charts above.

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

 

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

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