Why Coca-Cola Consolidated Stock Skyrocketed This Week
Key Points
Coca-Cola Consolidated stock surged this week as the company bought back shares from one of its largest stakeholders.
Coca-Cola Consolidated bought back $2.4 million in stock from The Coca-Cola Company.
The stock also got a boost from sector rotation trends.
Coca-Cola Consolidated (NASDAQ: COKE) stock soared this week following a big financial move from the company. The bottling specialist's share price marched 15.8% higher in a stretch of trading that saw the S&P 500 nudge 0.1% higher and the Nasdaq Composite decline by 0.5%.
After the market closed on Nov. 7, Coca-Cola Consolidated announced that it bought back all of its common stock that had previously been held by The Coca-Cola Company. Investors are bullish on the move, and Coca-Cola Consolidated stock is now up roughly 26% year to date.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: Getty Images.
Investors like Coca-Cola Consolidated's increased autonomy
Investors poured into Coca-Cola Consolidated stock this week following news that the company had repurchased $2.4 billion in common stock that was held by a subsidiary of the Coca-Cola Company. While the beverage giant will continue to rely on the Coca-Cola Consolidated for bottling, the stock buyback gives Consolidated a greater degree of autonomy and could pave the way for greater flexibility on pricing. Along with the buyback, The Coca-Cola Company also relinquished its seat on Consolidated's board of directors.
Coca-Cola Consolidated stock also benefited from sector rotation
Investors dumped speculative and highly growth-dependent stocks this week, but the S&P 500 actually managed to close out the week narrowly in the green. The benchmark index was able to end the stretch in positive territory because investors were buying into safer stocks rather than taking their money out of the market entirely. With investors selling out of artificial intelligence (AI) stocks and looking for safer plays, Coca-Cola Consolidated's valuation got a boost from sector rotation trends.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.