This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Coca-Cola's Pause Can Refresh Your Profits

NEW YORK ( TheStreet) -- It's not often that shares of Coca-Cola (KO - Get Report) fall below their fair-market value. Even amid so-called "bad quarters," these shares rarely get cheap. Although Coca-Cola didn't have an exceptional fourth quarter, don't expect the stock's recent 4% decline to snowball out of control. With shares down roughly 13% from their May 2013 high, there's still plenty of value to be had here.

As seen in results from PepsiCo (PEP) and Dr. Pepper Snapple (DPS), weak volume and compressed margins have been the story in the food and beverage sector. Not to mention, the entire group has been hurt by the term "liquid candy," shorthand for heightened nutritional fears regarding the rise of obesity. This is an issue that plagues close to 40% of Americans and has become a global concern.

[Read: Sozzi: 10 Awesome New Foods Invading U.S. Supermarkets]

Accordingly, with vocal opposition from the likes of former Mayor Bloomberg in New York, many states have begun to prioritize ways to address (among other things) beverage consumption, which according to many experts is a key contributor to weight gain. Today, the Street is acting surprised that Coca-Cola's fourth-quarter revenue declined 4% year over year.

It's true the 1% total volume growth for the quarter (versus expectations were for 2-3%) disappointed. I won't even pretend that that 1% decline in North America isn't a big deal. But with so many social/business obstacles in the Carbonated Soft Drink  market, what did we expect?

[Read: Jim Cramer: Where the Bargains Are]

As TheStreet's Stephanie Link pointed out in an article yesterday, there is still much more to Coke than a meager North American soft drink company. The soft drinks segment is only one aspect of it its business.

Link pointed out that close to 80% of Coca-Cola's operating profit comes from international markets, with a meaningful percentage (roughly 55% of its total operating income) coming from emerging markets. Let's also not discount that the company grew volumes by 8% and 6% in India and Africa, respectively. And despite China's economic struggles, the region still grew 3%. What this means is that Coca-Cola, despite the downbeat results, still has growth on tap.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KO $43.36 0.93%
AAPL $118.88 0.96%
FB $105.74 -1.13%
GOOG $748.28 -1.02%
TSLA $218.25 0.23%


Chart of I:DJI
DOW 17,812.19 +19.51 0.11%
S&P 500 2,089.14 +2.55 0.12%
NASDAQ 5,102.8080 +0.33 0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs