The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By Tom Taulli, InvestorPlace Writer
NEW YORK ( InvestorPlace) -- Coca-Cola's (KO) cash machine continues apace. In its latest quarter reported earlier Tuesday, the company posted net income of $2.8 billion, or $1.20 per share. This was up from last year's $2.37 billion, or $1.02 per share.
For the past couple of years, Coca-Cola's stock price also has been a winner. In 2009, the return was 29.3%, and a year later, it was 18.5%.However, as for 2011, things have slowed down, with the shares gaining only 3.7%. Perhaps the valuation is a bit too high? Or can Coca-Cola bring another double-digit year for shareholders? Here's a look at the pros and cons: Also See: 9 Great Investment Ideas for a Crazy Market.
ProsBarriers to entry. When it comes to distribution, Coca-Cola has one of the most extensive footprints. Its beverages are sold in more than 200 countries through bottling operations, partners, wholesalers and retailers. It's actually the world's largest beverage distribution system, which accounts for 1.7 billion servings every day. Brand portfolio. The company has more than 500 beverage brands, with four of the five top in the world, including Fanta, Sprite and, of course, Diet Coke. But Coca-Cola continues to invest huge sums into marketing, and it also has been getting more aggressive with new media like Facebook and Twitter. Emerging markets. Coca-Cola is positioned nicely to benefit from the growth in countries like China, Russia and Mexico. There also have been investments in Africa. The good news is that Coca-Cola has the cash flows -- and expertise -- to make the right moves in these markets. Consider that in the latest quarter, volume increased by a substantial 21% in China. The company also made strong gains in Latin America.
ConsNorth America. This segment continues to be a drag. In fact, it looks like the weakness will continue because of high unemployment in the U.S. The competition also is intense, especially from Pepsi (PEP). Also See: 5 Retail Stocks to Sell Commodities costs. There is likely to be continued pressure from rising input costs, such as from sugar and cocoa. Interestingly enough, Coca-Cola's purchase of its major bottler in the U.S. likely will exaggerate this.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV