A cross-border battle with some pop

Mexican-produced Coca-Cola may taste sweeter than its American counterpart, but which is the better stock?

By TheStreet Staff Nov 29, 2012 1:03PM

Image, Stock market report copyright Corbisthestreet logo

By Bill Gunderson

 

At the supermarket here in San Diego, there is now a cooler full of sleek, old-style bottles filled with Mexican Coca-Cola.

 

I like the Mexican version a lot better than the American version. There is just something about an ice-cold glass bottle. In addition, the Mexican Coke uses a less-refined sugar than American Coke, and this makes for a sweeter, bolder taste.

 

Drinking a Mexican Coke is like going back 40 to 50 years when the American version came in similar bottles and one needed a bottle opener to pop the lid. That was back when American Coca-Cola's (KO) stock was an aggressive growth stock and the Mexican version, Fomento Economico Mexicano SAB de CV (FMX), did not exist.

 

Since then, Coca-Cola has matured and growth has slowed down considerably for this Dow Jones Industrial Average ($INDU) member. The Atlanta company is now a $169 billion firm, while the Mexican version is just $35 billion.

 ko chart 1

 

 

 



















While I like the taste of Mexico-produced Coca-Cola better than American Coca-Cola, which is the better stock?

 

Let's begin with the performance of the two stocks over the years:

 

ko chart 2

 

 

 




















As you can see, it is virtually no contest. Or should I say no concurso? The Mexican middle-weight has it all over the American heavyweight. Compare the one-, two-, five-, and 10-year performance of these two stocks. $10,000 would have grown to almost $95,000 in pesos in FMX, while the American version delivered a much flatter $21,790.

 

I know, you have all heard the expression: "past performance is no guarantee of future results," but those are some significant numbers. If I am an odds maker on this battle, based on performance the favorite would seem clear.

 

But what about valuation? I don't like to buy stocks based on performance only. I like all three legs of the stool to be in place: performance, value and a good stock chart. How does the valuation weigh-in stack up?

 

 ko chart 3

 

 




















Fomento's shares are a bit more expensive than its U. S. counterpart, but then investors have to pay up a bit for superior growth. Fomento's income is expected to grow by 14.3% per year over the next five years while Coke is looking at just 8.2% growth. In fact, the PEG ratio is much more favorable on the Mexican middle-weight contender.

 

Advantage: FMX.

 

While the food and beverage sector is not exactly one of the top-ranked sectors in the market right now, I like the fact that Fomento also owns convenience stores. This gives it exposure to the more highly rated consumer and retail sectors.

ko chart 4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lastly, let's compare the charts of the two stocks:

 ko chart 5

 ko chart 6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

















I prefer to buy stocks in uptrends. Even though I have owned FMX for a while, I would have no problem buying this stock today.

 

 ko chart 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In fact, when I compare Fomento against the other 3,185 stocks that I follow, it comes in at number 34. Not bad for a large-cap.

 

I think I will pop open an icy cold Mexican Coca-Cola and ponder the fiscal cliff.

 

At the time of publication the author had a position in FMX.

 

More from TheStreet.com

34Comments
Nov 29, 2012 3:37PM
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Mexican Coke is allowed to put sugar in and taste more like "Original" "real" coke. US Coca-Cola cannot use "real cane" sugar and uses high frutcose since becoming "new Coke" then changing back to "original formula", but they changed the sweetning base at that time. Mexican Coke is more the real thing!

 

 

Nov 29, 2012 4:02PM
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Sometimes I treat myself to a Mexican Coca-Cola and it is BY FAR a better tasting product. You would think that US Coke would put their best product out there...and they could by getting rid of the high fructose corn syrup they use. But that would mean getting a few pennies less profit per bottle. Come on, how much more money does thier CEO really need!?
Nov 29, 2012 3:51PM
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I doubt this writer has really compared both drinks.  If you have had both, Mexican coke is not nearly as sickening sweet as the corn syrup version.  The Mexican coke is a bit more smooth with a crisp finish as opposed to the nasty film that you are left with in your mouth from the US version. Thank goodness for overseas coke products and Cuyohoga county, Ohio coca-cola.
Nov 29, 2012 4:13PM
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I don't think Coke "isn't allowed" to use real cane sugar, they use high fructose because it is cheaper. Almost all soft drinks use high fructose now, and the change sure didn't get much publicity. Too bad too, because mexican coke is MUCH better than the U.S. version, it is the only soft drink I buy now.
Nov 29, 2012 4:27PM
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I agree with everyone, I lived near the border most of my life and mexican coke is the best, to bad America uses so much corn fructose to sweeten everything instead of putting it on the table and in the live stock.  Also need to get it out of the fuel since the drought is going to really hurt the farmers and ranchers they need all the grain and hay they can get to keep us fat and happy.
Nov 29, 2012 5:10PM
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The Mexican Coke is much better... I won't drink the American Coke with high fructose corn syrup and the glass bottles give it a much better taste... The plastic bottles suck... the cans are OK at best... 
Nov 29, 2012 6:54PM
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I drink the Mexican Coke because of taste but Pepsi and Mountain Dew had "throwback" drinks and they tasted like the old times.

Is Pepsi and Mountain Dew still selling the "throwback" drinks?

Target did carry them.

Nov 29, 2012 8:22PM
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What ever happened to returnable bottles? people harp on this new green thing, re-using bottles was more green than recycling plastic.

 

Bring back re-usable glass bottles !!!!

Nov 29, 2012 6:25PM
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Does it have the coca based flavor? Removing it for 'new coke' is what really ruined the taste, along with replacing sugar with corn syrup sweetener. As soon as they did that, the US gov. made any product of the coca plant a schedule narcotic, even though the flavor had not been processed into cocaine. Why? Because they could.
Nov 29, 2012 4:33PM
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I prefer Mexican Coke but the truly best is Thumbs Up from India. As you can well imagine Coke Cola owns them all. It is probably psychosomatic but there's a bit of euphoria if I haven't had one of these in a few days in fact...I am presently working on a case of Mexican Coke. At a party a few days ago (we always offer regular can or bottle Coke) I figured I bring my private stock of Mexican Coke out thinking no one would notice. NOT SO!! Never bring your private stock out because someone might be disappointed .
Nov 29, 2012 10:29PM
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$169,000,000,000 .....They are charging to much for sodas these days
Nov 29, 2012 8:27PM
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We won't drink the Coke made in America. It never went back to the original formula even though they said they did.  The Mexican Coke is made with pure cane sugar where the one here is made with high fructose corn syrup.  The doctor has told me repeatedly not to eat any product with the high fructose corn syrup because it causes the body to retain the fat instead of metabolizing it.
Nov 29, 2012 7:41PM
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I believe its not just coke but pepsi also is bottled in  Mexico. I didnt know there was a diff actually untill the lunch truck that served where I work started carrying a few of them. I grabbed one one day thinking like allot of us older people be a nice change adn reminded me of the old days and yes cane sugar and not corn syrup,and I believe it being in a bottles also made it taste so much better. I hope that someday we go back to some type of bottle I believe plastic does add a flavor if not other things to the soda. Small note on sugar  because the growers of sugar beets at the time wanted protection from imported cheaper sugar cane they lobbied congress to put an import fee and quotas on imported sugar cane to make it more expensive. Soda makers decided to switch to corn syrup because it was cheaper than either at the time.The use of corn to produce ethenol is endangering that though
Nov 29, 2012 5:45PM
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I lived in Mexico for 7 years and the coke in the bottles reminded me of when I was a kid. Since then I have developed type 2 diebetes so I can only drink diet coke now but I miss the cokes in the bottles.
Nov 29, 2012 11:07PM
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I tried posting twice our Opinion of Coke...Old Coke was best..

Pepsi "throwback", yes still sold..

If we lived close to Mexico, we would be buying it.

New Coke sucked then changing back, the recipe changed too...

The sugar thing was explained earlier...too expensive because of subsidies.

 

We bought or saved an 8 pack of 16 oz bottles from before they changed to "new coke".

Drank one years ago celebrating, still got the other 7  and one empty in the 8 pk carton.

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Our own government has declared war on us ....that is the USA Gov: when it makes it their priority and this has been the entire lst admin continued to the currently making illegals, illegitimaes their priority all while US Military our sons, daughters, fathers, mothers, brothers, sisters, uncles, aunts, grandmothers, and grandfathers have each generation and right now been systematically sacrificed on foreign soil each and ev ery generation lst in and lst to die for the worlds overpopulation while we have Open Borders Criminal Illegal Alien Invaders not only welcomed: but rewarded continually to everything...stealing raping robbing, Dial#2 for Spanish: the USA Giveaway continued TREASON WITHIN...
Nov 29, 2012 6:39PM
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You know how they say don't drink the water in Mexico?  Well the same holds true for their bottled soft drinks.  I've had this glass bottled in Mexico version of Coke and thought it tasted great but.... a few hours later I had major regerets.

 

Nov 29, 2012 6:47PM
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finally! a decent product emerging from mexico rather than drugs illegal aliens and all the other s*** sent to america! 
Nov 29, 2012 5:31PM
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i dont care what you all are saying i live in detroit mi (large # of hispanics,) and so am i , the little bottles go flat before i can finish it .the carbonation should last ,i think its dated for freshness,and by the time it gets to mi its flat..that being said united states all the way baby.................................

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