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Buffett Watch: Coca-Cola's a Keeper

Stocks in this article: KO PEP BRK.A

Last week, Warren Buffett's Berkshire Hathaway (BRK.A) submitted its fourth-quarter stock holdings to the SEC.

In the SEC filing, we learned that Berkshire decreased several major positions, including Procter & Gamble (PG) , ConocoPhillips (COP) and Johnson & Johnson (JNJ).

However, Berkshire's 200-million-share-stake in Coca-Cola (KO) didn't change.


The following are key insights on Coca-Cola from

From Why Buffett Is Sticking With Coca-Cola:

What does the Buffett approach like about Coca-Cola, whose 2,800-plus products include not only Coke but also major brands such as Sprite, Minute Maid, Powerade, Nestea, Dasani and Fanta? A lot. For starters, Buffett has typically seeks out firms that have posted persistent earnings growth over the long haul, and Atlanta-based Coca-Cola's earnings dip this year was its first since 2000 -- and considering the earnings-sapping recession we're in, the 8-cent drop from 2007 to 2008 isn't bad at all.

Secondly, Coca-Cola has $5.76 billion in annual earnings, meaning it could pay off its $2.78 billion in debt in less than half a year, if it so chose. That's just the kind of conservative financing that my Buffett-based model prizes.

Another reason this model likes Coca-Cola is its management.

Read the full version of Why Buffett Is Sticking With Coca-Cola (on RealMoney).

From Coke's Stock Opens Happiness for Investors:

Investors are more favorable to Coke than they have been. The company's stock has fallen only 5.5% this year, making it the Dow's second-best performer. Ratings' quantitative model, which examines a company's valuation metrics, financial situation and analysts' consensus expectations of future growth, awards Coke a B-minus, which equates with a "buy" recommendation.

With a dividend yield topping 3.5% and priced at a modest 13.8, Coke's reward grade from Ratings is a B-plus. Its $9.3 billion in debt and price of nearly five times book value hold the firm's risk grade to a C-minus.

Read the full version of Coke's Stock Opens Happiness for Investors ( Ratings Report on Coca-Cola).

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