☕️ Yield junkies love Coke, but smart investors like another fizzy

Howdy! 👋 

Here we go again – the markets are split. 

Today both the Dow and the S&P 500 are green while the tech-driven Nazzy is red as I type. 

As troubling as that may appear at first glance or the media wants you to believe, don’t let what’s happening knock you off course. 

Volatility isn’t the enemy; it’s the price of admission.  

Here’s my playbook. 

1 – GM’s dead cat bounce 

GM’s popping today after beating top- and bottom-line expectations — meaning it made more money and brought in more revenue than Wall Street’s spreadsheet gang thought it would — and even raised guidance for the rest of the year. EPS came in at $2.96 vs. $2.43 expected, and revenue hit $48.8B vs. $44.6B expected. (Read) 

Shares are up ~14%/$8.33 as I type. 

I learned a long time ago that whenever situations like this one arise, it’s often a good bet to see what’s on the other side of the proverbial trade. 

For example, CEO Mary Barra says her “top priority” is to get margins back to 8–10% by “driving EV profitability.” 

Good luck with that. 

There are far better long-term plays in next-gen mobility… and none of ‘em come with Detroit’s baggage. Like oh, I dunno… Tesla. 

Just sayin’. 

Keith’s Investing Tip: Investing isn’t about collecting stocks. If you want to win, you’ve got to play to win. Most people play not to lose but do so anyway. Case in point, GM has returned 93.57% and 149.60% over the past 5 and 10 years. Tesla has returned 216.57% and 3,034.96% respectively by comparison.  

2 – Dividend investors beware, Coke’s fizz is fading 

Coca-Cola beat Wall Street’s estimates this morning, posting Q3 earnings of $0.82 a share versus $0.78 expected, with revenue up 5% to $12.46B. (Read) 

That’s the good news. 

And the bad news?  

Demand’s still flat in North America and Latin America, and the company’s products are not exactly flying off the shelves elsewhere either. Coke’s so-called “unit case volume” rose just 1% — mostly thanks to bottled water, coffee, and sports drinks. In other words, the classic Coke you and I grew up with is as flat as a week-old soda. 

Which brings up something interesting. 

Dividend investors love Coca-Cola because it’s a) a long time Buffett fave and b) a dividend “King” with 50+ years of uninterrupted dividend increases. 

I think Pepsi’s the better bet here, imho, if you’re into fizz… diversified portfolio, stronger global growth, a 3.62% yield, which edges out Coke’s 2.86%. 

Plus, it’s undervalued and there’s a good argument that it could be poised for a rebound. 

Hmmm. 🤔 

3 – Still a no brainer investment choice 

War, terrorism, and ugliness remain growth industries, unfortunately. 

Lockheed Martin just proved it yet again. (Read) 

The world’s largest defense contractor beat expectations again, posting Q3 adjusted EPS of $6.95 vs. $6.35 expected — and showing real progress on long-delayed programs like the F-35 fighter. 

Should you buy it? 

MyPOV is that the better question is why you wouldn’t. 

History shows very clearly that conflict drives innovation and profit potential.  

Demand for AI-enabled defense, cybersecurity, and next-gen weapons is at an all-time high — and still rising. Which is why I continue to favour top-tier names. 

Should you buy Lockheed Martin? 

Before you do, consider that AI plays a far more significant role in defense than most folks believe and that there’s considerably more upside in derivative investments that defense contractors “must have” in order to operate. One of my faves, for example, has returned 116.32% over the past 5 years, roughly 6x more than LMT. 

Hopefully you’ve got this covered in your own investing or are at least thinking along similar lines. If you’d like some help, you know where to find me. 

4 – Apple’s “weakness” aged like fine wine 

Apple shares hit all-time highs yesterday following the news that iPhone 17 sales are up 14% compared to last year’s iPhone 16 during the first 10 days of release — with China and the U.S. leading the charge. (Read) 

I hate to say I told you so, but in this case, I did. 

Explicitly. 

In fact, I was speaking to Liz Claman on April 8th at a time when most thought the end of the financial universe was upon us and said two things during my interview: 1) that weakness is a buying opportunity, and 2) I expect Apple to double or triple in 3-5 years. (Watch) 

So far so good. 

Apple has returned 45.63% since then versus the S&P 500, which has returned 32.98% in the same time frame. 

Tasty! 🍎 

5 – Warner Bros. Discovery: “Now accepting lowball offers and Hail Marys” 

Warner Bros. Discovery says it’s open to a sale — and shares have jumped roughly 9% on the news. 🤦‍ 

You can’t make this stuff up.  

Earlier this year, the company announced plans to split into two — one focused on streaming and studios, the other on global networks.  

Now it’s apparently “reviewing all strategic options” after getting “unsolicited interest” from multiple parties. (Read) 

CEO David Zaslav says the goal is to “unlock value,” which is corporate-speak for please buy us before the next earnings call. 

Debt never outruns disruption. 

Warner Bros. Discovery has been trying to reinvent itself since the last reinvention; meanwhile Netflix, Disney, and even Apple have eaten its lunch. 

I noted a while back that I think Oracle and the Ellison Family may make a run at the company, and the rumor mill says they’re amongst the suitors. (Read) 

Stick with strength a la Oracle if you’re going to play along. 

Team Ellison has the means, the motive, and the mojo to reinvent the entire industry… and a proven track record of doing so. 

Keith’s Investing Tip: Deals like this one tend to usher in an entirely new paradigm in staid, antiquated industries. I think the deal sparks a complete reset for conventional broadcasters which are plagued by increasingly limited content budgets, declining & fragmented viewership and legacy debt that hobbles ‘em worse.  

Unfortunately, there’s not a “old-school-only broadcaster’s ETF” for me to short but I sure as heck wish there were! 💯 

Bottom Line  

It makes no sense whatsoever to apply the same tired old analysis everybody else does but expect different results.  

Think differently.  

Embrace change.  

Invest in the best, ignore the rest. 

As always, let’s MAKE it a great day. You got this – I promise! 

Keith 😀