Clorox Stock In A Blue-Chip Portfolio

Since June of 1998, Coca-Cola stock has returned 2.5% annually. I always keep that figure in the back of my mind, as it is a harsh reminder that getting the company right is never enough–you can’t mess up the overvaluation and drastically overpay. In a way, that 2.5% is actually an incredible testament to the enduring strength of Coca-Cola’s beverage portfolio, as the valuation shifted from 62x earnings to 19x earnings over the June 1998 through September 2015 measuring period. The fact that you were able to come close to keeping pace with inflation, despite paying almost triple what the asset is worth, is actually impressive in light of the overvaluation amount.

Although the 2015 market presents nothing quite so drastic, there are still companies trading at valuations far in excess of what is merited when you take a deep look at the growth projections, balance sheet, and historical valuation … Read the rest of this article!