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The Coca-Cola Co (KO) Stock Is Fizzing With Value

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The Coca-Cola Co (NYSE: KO ) has been around since its humble beginning at an Atlanta, Georgia soda counter in 1886. Since then, it has built one of the iconic brands in the world. According to the company website, today people around the world enjoy Coke products 1.9 billion times every day.

The Coca-Cola Co (KO) Stock Is Fizzing With Value

Source: Chris Nielsen via Flickr

There's no doubt that this soft drink company is a powerhouse and dwarfs all competitors by market cap, save PepsiCo, Inc. (NYSE: PEP ) and Nestle SA (ADR) (OTCMKTS: NSRGY ).

But nowadays, many analysts are concerned that KO's size may be a disadvantage rather than an advantage. The soft-drink market is undergoing significant transformation from the model that served it so well for the past three or four decades.

New consumers are no longer focused on the sweet drinks of the past, like KO's flagship Coke product. Now, consumers are interested in flavored waters, energy drinks and juices that have less "man-made" flavors and ingredients.

This is a long-term transition, but it is one that is crucial to get right for the big soft drink companies. At this point, analysts feel that KO is moving in the right direction, but isn't moving fast enough for their taste.

KO Stock: A Dividend You Can Lean On

That gives us a great opportunity to buy into KO stock on the cheap. We can get one of the world's Dividend Aristocrats at a discount. KO has never missed a dividend payment since 1920 and has raised its dividend every year for the past 54 years. Right now, that dividend yield is a very attractive 3.4%, much higher than it's competitors.

And as for its ability to transition to new market demands, well that has been in the company's DNA for decades. For example, KO has been the No. 1 soft drink company in Japan for more than 50 years. But Coke isn't the reason.

Japan is a nation known for its unique tastes in both food and drink. But it's also known for its passion for food and drink. KO learned what the market wanted and provided it - Ayataka iced green tea. This is why KO dominates in Japan.

Now take that model and expand it around the globe.

Also remember that much of the world is still growing a taste for Coke and other soft drinks. Distribution has been the challenge. For example, KO just inked a deal to buy back the outstanding shares of Coca-Cola Beverages Africa from Anheuser-Busch InBev SA NV (ADR) (NYSE: BUD ) for $3.2 billion.

Basically, KO is taking over bottling and distribution operations on the continent to better supply its markets there with the most popular products. The deal includes 30 bottling plants in 10 countries. It also includes businesses in El Salvador and Honduras.

The point is, KO continues to find ways to grow its business, regardless of changes in tastes and economic challenges. A growing middle class in developing countries and great access to markets will also help fuel long-term growth of KO brands.

This is the perfect time to step in and grab some KO stock while the Street is still cautious. KO has proven its ability to flourish for over a century and that is an impressive track record worth investing in at a discount.

Richard Band'sProfitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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