founded: 1886, NYSE code: KO, homepage: www.thecoca-colacompany.com

Overview
As the producer of the most widely drank soft drink on the planet, The Coca-Cola Company hardly needs any introductions. It’s famous syrup, made following a secret formula dating all the way back to late 19th century, serves the bottlers around the World as the most vital ingredient in production of their best selling range of soft drinks.

In 2006, the major part of Coca-Cola’s profit came from its “domestic” North American markets (29.1%), followed by North Asia with Middle East (16.5%) and European Union markets (14.6%). A significant 21.2% portion of earnings was derived from the company’s bottling investments.

Analysis of December 2006 financial results:

• Market Cap: Depending on the daily prices of the company’s stock the total market capitalization is around US$140 billion over 2.35 billion of issued shares
• Shareholders Equity: US$16.9 billion making the stock’s book value approx. US$7.20 per share (5.35% growth on FY 2005)
• Earnings per share: US$2.16 making the average EPS growth in last 4 years about 16.2%
• Return on Equity: 30%, averaging around 29.4%pa in last 5 years
• Balance Sheet: Working capital of US$2.6 billion (ie. US$1.10 per share) versus long term debt of US$1.3 billion

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 7%
• Share price in 10 years time: about US$108 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: US$124 (share price of US$108 plus US$16 of the 10 years worth of dividends if the current payout ratio of about 50% persists)
• Rate of Return in next 10 years based on the beginning of December 2007 price of US$63.75 per share: 6.9%pa

Pros and cons:
+++ Virtually unchallengeable market leader within its industry
+++ Excellent balance sheet (ie. entire debt could be easily paid off using about half of currently held cash)
+++ Consistently achieving very high ROE levels year after year
+++ Tirelessly increasing shareholders’ value by regular stock buybacks of its own stock
— Sheer size of the company’s operations may prove to be a hurdle for continuous earnings growth in the future

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founded: 1989, ASX code: FAN, homepage: www.fantasticfurniture.com.au

Overview
Fantastic Holdings Limited is one of the leading Australian furniture retailers specializing in the import and production of non expensive furniture items. As of June 2007 Fantastic Holdings operates about 80 stores and provides employment to approximately 1000 people throughout Australia.

Analysis of June 2007 financial results:

• Market Cap: Depending on the daily stock price of this company the total market capitalization is around $400 million over 94 million shares on issue
• Shareholders Equity: $51 million making the stock’s book value approx. $0.54 per share (13.3% growth on FY 2006)
• Earnings per share: $0.17 making the average EPS growth in last 5 years about 21.8%
• Return on Equity: 31.4%, averaging around 34.7%pa in last 3 years
• Balance Sheet: Working capital of $33.2 million (ie. $0.35 per share) versus total debt of $9.1 million

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 13%
• Share price in 10 years time: about $10.11 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: $12.24 (share price of $10.11 plus $2.13 of the 10 years worth of dividends if the current payout ratio of about 60% persists)
• Rate of Return in next 10 years based on the beginning of December 2007 price of $4.35 per share: 10.9%pa

Pros and cons:
+++ Great levels of ROE as well as yearly EPS growths
+++ Very strong balance sheet (ie. entire debt could be easily paid off using about 65% of one year’s net earnings)
+++ Very high levels of company stock ownership amongst the top management, where top executives hold over 55% of all outstanding shares on issue
— Operates in a cyclical, consumer income sensitive market against with very strong competition pressures from companies such as Harvey Norman, Freedom Furniture, IKEA and Domayne

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founded: 1971, ASX code: ADG, homepage: www.adtrans.com.au

Overview
Adtrans Group Limited, originally a South Australian company nowadays operates over 20 automotive retail businesses in its home state, 6 in Victoria and 1 in NSW. It employs about 920 people and proceeds with the sales of over 15,000 vehicles per year. The main brands in its franchise stable include such names as Ford, Toyota, Chrysler, Jeep, Iveco, Mercedes-Benz and more.

Analysis of June 2007 financial results:

• Market Cap: Depending on the daily stock price of this company the total market capitalization is around $110 million over 23 million shares on issue
• Shareholders Equity:: $56 million making the stock’s book value approx. $2.43 per share (7.7% growth on FY 2006)
• Earnings per share: $0.35 making the average EPS growth in last 3 years only about 3.7%
• Return on Equity: 14.3%, averaging around 15%pa in last 3 years
• Balance Sheet: Working capital of $23.6 million (ie. $1.03 per share) versus total debt of $94.4 million

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 8%
• Share price in 10 years time: about $6.70 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: $9.95 (share price of $6.70 plus $3.25 of the 10 years worth of dividends if the current payout ratio of about 60% persists)
• Rate of Return in next 10 years based on the beginning of December 2007 price of $5.10 per share: 6.9%pa

Pros and cons:
+++ Not issuing new shares hence maximising the value for current shareholders
+++ High levels of top management shareholding participation (in excess of 26% of issues shares held by the company executives)
— Cyclical business where one year of good EPS growth often follows another year of EPS decline
— Rather large amounts of debt levels given by the big amounts of cash to operate in this industry

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