The Consumer Stock Requiem

Costco, Walmart, and Coca-Cola. Three titans of consumption, each a monument to human appetite. And, naturally, objects of our…speculation. The late Mr. Buffett, a man who understood both the markets and the peculiar cravings of mankind, favored the fizzy elixir. Though, one suspects, even he occasionally glanced at the sheer volume of discounted toilet paper moved by the other two, and wondered if he’d made a pact with the wrong demon.

Berkshire Hathaway’s fondness for Coca-Cola stretches back decades – a testament to consistency, if nothing else. Though, I’ve known portfolios with more exciting histories. The thing about long-term holdings is, they witness everything. The booms, the busts, the rise of avocado toast. They become…weary. Costco and Walmart flitted in and out of the Berkshire orbit, transient visitors. Perhaps a wise precaution. One doesn’t want to become too familiar with the habits of the masses.

The numbers, of course, are a vulgar necessity. Since 2006, Walmart has multiplied nearly eightfold. Costco, a staggering eighteenfold. Coca-Cola? A mere 240%. A respectable increase, to be sure, but hardly the stuff of legend. One might almost feel pity for the poor beverage. It’s as if the market has decreed that people prefer bulk purchases and discounted everything to, well, refreshment. A curious age.

But past performance, as the oracles of finance are so fond of repeating, is a treacherous guide. The future, thankfully, remains unwritten. And in the next twenty years, it’s entirely possible that Coca-Cola will leave its rivals choking on dust. Not through some miraculous innovation, mind you, but through the simple, elegant power of…valuation.

The Weight of Expectation

Costco and Walmart have outperformed not simply because of earnings growth, but because the market has imagined greater growth. It’s a self-fulfilling prophecy, fueled by optimism and, let’s be honest, a touch of collective hysteria. Costco currently trades at 46.5 times forward earnings. Walmart, a slightly more restrained 39 times. Coca-Cola? A modest 21.5 times. The difference isn’t just a number; it’s a measure of faith. Or, perhaps, foolishness.

These elevated valuations suggest that investors expect both companies to continue growing at an extraordinary pace. A pace that, frankly, is unsustainable. It’s like asking a marathon runner to sprint for twenty years. Sooner or later, they will falter. And when they do, the market will exact its revenge. A swift, merciless correction.

The risk, of course, is stagnation. Growing into a valuation is a slow, agonizing process. It’s like watching a magnificent oak tree slowly succumb to blight. A tragedy, really. But one that plays out with depressing regularity on the stock market.

A Modest Proposal

Analysts predict around 10% earnings growth for Costco and Walmart. A respectable figure, certainly. But it may not be enough to justify their current valuations. Coca-Cola, on the other hand, is projected to grow at a more conservative pace. Yet, this very conservatism may be its salvation. If the company can sustain high single-digit earnings growth, it could quietly, steadily, climb higher. A tortoise, outrunning the hare.

And let’s not forget the dividend. A generous 2.9% yield, with a history of consistent increases. A small, but significant, reassurance in a world obsessed with exponential growth. It’s like receiving a handwritten letter in the age of email. A touch of humanity, in a sea of algorithms.

Therefore, while Costco and Walmart may offer the allure of rapid gains, it is Coca-Cola that I would choose to hold for the long term. Not because it is the most exciting stock, but because it is the most…sensible. A quiet, unassuming survivor, in a world of fleeting trends and inflated valuations. A fitting companion, for a long and uncertain journey.

2026-01-16 16:23

The Weight of Expectation

A Modest Proposal

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