Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Is Coca-Cola Still the "Real Thing" For Stock Investors?

Companies / Investing 2013 Apr 01, 2013 - 01:20 PM GMT

By: Money_Morning


David Mamos writes: Suffice it to say, Coke has been a big part of our culture for over 100 years.

When I was growing up I wasn't shy about shaking a malfunctioning vending machine whenever my craving for an icy cold Coke kicked in.

But lately, have you noticed you are more likely to grab a Starbucks coffee for your caffeine fix?

Or maybe you are more inclined to pick up a sports or energy drink when you are on the go. Better yet, as you become more health conscious, it's a juice or a fruit smoothie that does the trick.

The good news is that the Coca-Cola Company (NYSE: KO) has "matured" right along with you and is trying to use its status as the most recognized brand in the world to deliver new products to its thirsty customers.

That's one of the reasons I'm so bullish about Coke these days. But it's not the only one...

Coca-Cola's Global Appeal
Putting aside Coca-Cola's variety of products for a moment, the company has such a wide global appeal that even if one region may be waning, another area is likely flourishing.

With roughly 80% of total sales outside the United States, Coca-Cola has the unique ability to spread risk across the entire globe - in all likelihood more so than any other company in the world.

Coca-Cola is also always on the lookout for growth opportunities in countries where its drinks aren't as prevalent as they may be in more developed nations.

In the last reported quarter, Coca-Cola's global sales volume rose by 3%, partly due to further advances into Russia and India, which saw growth of 19% and 32%, respectively. Globally, the two countries are showing increases in carbonated beverage consumption, which is why Coca-Cola is focusing more attention and diverting more capital there.

One place Coca-Cola has not fared well lately is China.

China's volume was down 4% in the fourth quarter after growing 10% in the year-ago quarter. However, the company said it believes that the slowdown in China's economy is primarily to blame for this downward trend.

Another area with continued economic concerns is Europe, where volumes declined 5% during the quarter and 1% for the year. Even still, with a 1% gain in sales volume in North America for the most recent quarter, it is plain to see that no one region controls the destiny of Coca-Cola.

Through shrewd marketing, investments, and good management of its currency exposure, Coca-Cola is the epitome of what Money Morning Chief Investment Strategist Keith Fitz-Gerald terms a "glocal."

Glocals are companies with global brands and a highly localized presence. They typically have fortress-like balance sheets, experienced management and, most importantly, huge percentages of their revenues coming fromglobal marketsgrowing at 3-5 times the speed of our own.

Changing Tastes
Coca-Cola has now realized that it has to appeal to a more diet-conscious public, since Coke and other sugary drinks are being banned by the likes of New York City's Mayor Michael Bloomberg and First Lady Michelle Obama.

And although it's still loaded with high fructose corn syrup, Coca-Cola's Powerade and its appeal as a sports drink was the driving force behind the 1% sales volume increase in North America.

In fact, Coca-Cola reported an 8% surge in non-carbonated beverages as sales of carbonated beverages dropped. Other products like Honest Tea (found in health food stores) and Simply Orange (advertised as "100% pure") are quickly gaining market share.

Coca-Cola completed its purchase of Honest Tea in 2011, and the company continues to purchase smaller niche-beverage companies.

For instance, as of the previous quarter, Coca-Cola owns 90% of Innocent Drinks. Although not well known in America, the beverage company is extremely popular in the U.K. and Europe. Innocent Drinks primarily makes bottled smoothies, but does it in a very eco-friendly way, using only select farm ingredients in its blends.

Coca-Cola already owns a similar line of products under the Odwalla brand in the U.S., and the combination of the two should streamline quite well.

Also, realizing that its sugary carbonated drinks need a bit of an overhaul, Coca-Cola is changing Sprite's ingredients in the U.K. as well. The company will now replace some of the sugar in Sprite with the sweetener Stevia, which will result in 30% fewer calories for the soda.

Unlike other sweeteners, Stevia is a naturally derived, sweet-tasting herb that can be crystallized and turned into powder for consumption, and may also be used in liquid form. If Coke's attempts to lower calories with something that is plant-derived prove successful, we may see this type of change in other beverages as well.

Of course, that doesn't mean that Coke and other carbonated colas won't be the company's biggest sellers.

After all, the West may be on a health kick whose tastes are going through a transition, but China and India still have billions of people that aren't exposed every day to a bubbly Coke.

Once again, it is another example of how Coca-Cola is able to spread risk globally by having such varied products tailored to what the locals actually want.

"Have a Coke and a Smile"
Coca-Cola has also recently announced a generous increase in its dividend. The quarterly dividend increased from 25.5 cents to 28 cents per share. The new dividend will yield approximately 2.8% annually. That marks an astounding 51 consecutive years that Coca-Cola has increased its dividend.

Meanwhile, Coca-Cola's free cash flow totaled over $7.8 billion during 2012. The company's solid cash position has allowed it to return value to shareholders through share buybacks. In all, the company repurchased over $3.1 billion in shares in 2012 and plans to repurchase $3 billion to $3.5 billion in shares during 2013.

Source: TD Ameritrade

But let's take it a step further by looking at a chart of the stock's performance over the last four years.

What you'll see is that Coke is in a solid uptrend, falling neatly between the upper and lower trend lines. It's marked by a series of higher highs and higher lows.

Those trend lines are about $4 apart, so with proper management of your position you won't stand to lose much if the markets decide to head south.

But the fact is, Coca-Cola is what it has always been - a value play for those seeking long-term appreciation with a nice yield.

So, just as our grandparents enjoyed drinking Coke long ago, I think our grandchildren will appreciate Coke even more if they were to inherit a few shares of Coca-Cola as well.

For these reasons I am a BUYER of Coca-Cola.

About the Author: David Mamos brings nearly 15 years of analytical experience to the table, with a background ranging from big-picture fundamental analysis to highly technical trading decisions. He began his career working as a financial advisor with Royal Alliance in 2001 and helped clients with portfolio management as well as buy-sell decisions before transitioning to the development, implementation and execution of trading strategies for aggressive investors.

Source :

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules