Coke's Revenue, Earnings Keep Flowing

NEW YORK ( TheStreet) -- There are some stocks that should be on all watch lists so you can pick up a few shares during periods of weakness.

Coca-Cola ( KO) is just such a stock. This is a worldwide brand that still has new markets to penetrate.

Lately the stock has been showing some weakness but still holds its own against the market, as this graph provided by Barchart shows. During the past six months, while the stock is up 2%, the market as measured by the Value Line index was up 3%:

Coca-Cola is a beverage company and engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. The company offers its beverage products through company-owned or controlled bottling and distribution operators, as well as through independently owned bottling partners, distributors, wholesalers, and retailers. The company was founded in 1886 and is headquartered in Atlanta, Ga. (Yahoo Finance Profile)

Factors to Consider:

Technical indicators provided by Barchart:

At the present time the stock rates a 48% Barchart technical sell signal and a Trend Spotter sell signal. Temporary technical sell signals can be a good time to buy stocks with solid fundamentals.

Although the stock is trading above its 20-day moving average, it has recently fallen below its 50- and 100-day moving averages. In the past month the stock lost 1.40% but is only 6.73% off its one-year high. The very weak Relative Strength Index of 28.19% and a technical support level of $37.26 may signal an accumulation point on this stock that has recently traded at $37.95.

Fundamental Factors:

Wall Street has always had this stock on its core holding model portfolios and 12 brokerage firms have assigned 18 analysts to monitor the stock numbers. These analysts predict revenue will grow 3.4% this year and another 5.1% next year.

Earnings are estimated to grow 3.6% this year, an additional 9.5% next year and continue to grow at an annual rate of 7.38% for the next five years. The P/E ratio of 19.40 is slightly higher than the market P/E of 15.30. The dividend rate of 2.68% is about 50% of projected earnings and above the market dividend rate of 2.30%. Analysts think, if these numbers are correct, investors could see a total annual return in the 10% to 12% range over the next five years.

The company has a solid balance sheet, gets an A++ financial strength rating and has good price stability and earnings predictability. The long run of increased revenue and earnings is something many other companies envy.

The product is a worldwide brand so the major concern is not sales but commodity and currency fluctuations. Growth in India has been over 20% and solid growth was also experienced in Japan, Russia, Brazil and China.

Investor Interest:

TheStreet has given this stock an A+ rating.

Wall Street analysts have issued six strong buy, six buy, five hold and only one underperform call to their clients and firms including Deutsche Securities, Citigroup and Credit Suisse advise client to keep this one. Warren Buffet is an investor in the stock and Jim Cramer has also given a thumbs up.

I like to use Motley Fool as a gauge for the individual investors' thoughts and 6,570 Fool readers gave the stock a 95% confidence vote to beat the market.

Peer Comparison:

The market always has the final say, and although Coca-Cola gained 9% during the past year AB InBev ( BUD) was up 62%, Pepsico ( PEP) was up 13% and Diageo ( DEO) was up 42%. Day traders might be more interested in these other stocks.

Conclusion: Coca-Cola is not a volatile stock, nor is it a high-growth stock. For conservative investors who have an IRA on a dividend reinvestment program this might be an ideal holding. Your retirement account should contain a portfolio of stocks with solid balance sheets and long, uninterrupted histories of increasing revenue and earnings and KO fits that mold.

As the turtle channel chart below shows, the recent price weakness seems to have bottomed out and a support level has been reached. Now might be a time to accumulate additional shares or make a purchase in your IRA and place it on a dividend reinvestment program.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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