By Sean Hannon, CFA, CFP, of EPIC Advisors from

When analyzing a company's value, I follow an exacting process. I read all the data available on the company and its competitors, analyze the footnotes and financial statements, and make multiple adjustments to the reported income statement and balance sheet. This process often enables me to derive an accurate view of what lies at the heart of the company as opposed to accepting management's reports at face value.

Once I have normalized for my adjustment, I derive fair value using seven different earnings methodologies and then work toward one consensus number.

Even though I have analyzed all relevant information fairly and objectively, I still need a discount factor that reflects the possibility that my analysis is flawed.

To create a margin of safety, I only buy the company's stock if I can purchase the shares at a 20% discount to fair value.

When I apply these steps to making an informed investment decision, many stocks fail to meet my requirements. Most well-known companies that operate strong franchises sell at a premium that reflects both the value of the company and its position in the market.

As often mentioned in my weekly newsletter EPIC Insights,this usually forces me to consider lesser-known companies or those facing serious business problems.

However, I occasionally find an opportunity to purchase a solid company at an attractive price level. This week I have found such an opportunity with Coca-Cola ( KO).

KO possesses one of the best-known brand names in the world. It offers a ubiquitous product that is sold around the globe. Over the years, its business has been run well, as the balance sheet is conservatively managed, capital is efficiently deployed and turnover ratios continue improving.

Having followed KO stock for a decade, I never felt the price was at the right level to justify purchasing the shares. From a valuation perspective, the market had always assumed KO could achieve long-term growth rates in excess of 10% and had decided a price-to-earnings multiple above 20 reflected its business prospects.

While I admire the business prospects and strong economic moat, I believe the long-term growth rate should be closer to 6%.

With such a growth rate and a variety of valuation models, I feel KO should trade near $52. Applying a 20% margin of safety, I derive an entry point of $42 per share.

With KO trading near its 52-week low, the price has finally reached a level that I find attractive. Having waited so long to buy the shares, I will take advantage of this opportunity and recommend KO as this week's fundamental trade.
At the time of publication, Sean Hannon was not long KO. Positions may change so click here to view their current portfolio. Sean Hannon has their investment record verified by Visit to track the real investments of thousands of proven self-investors live for free.