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Cola Hard Cash

In this last installment of Cramer’s weeklong series on transformational CEOs – the guys behind the curtain (and the big multiples) who single-handedly turn things around at huge, failing companies – he’s talking about Neville Isdell, the CEO of Coca-Cola since June of 2004.

Coke was in bad shape when Isdell took over. It had flat sales because the company bet the house on carbonated beverages, Cramer says, and it turned out that wasn’t where the growth was. Coke was a model of an insular corporate culture with a real distaste for innovation, he says. Coke had the chance to buy Quaker, which owned Gatorade, but they passed and Pepsi took it right out of their hands, a move Cramer thinks was practically criminal.

So Pepsi PEP continued to diversify into food and non-carbonated beverages, putting a lot of marketing muscle behind Gatorade and eclipsing Coke as the one great beverage stock.

But then Isdell came in during the summer of ’04. The stock bottomed in October of that year and since then, KO is up 36%. In a company as huge as Coca-Cola, it’s a feat to turn the stock around in a mere four months, and that is exactly what Isdell did, Cramer says.

But he didn’t stop there. Isdell introduced Coke Zero – the next time you’re at the grocery store, Cramer wants you to check out how much aisle space that stuff gets and how fast it moves. It’s a success story if ever there was one, he says. CNBC also reported last month that KO was in serious talks to buy Glaceau, the company that makes the popular vitamin water. It looks like Isdell is finally getting this lazy old company to diversify beyond carbonated beverages, which is exactly the right thing to do, Cramer says.

Coke’s last quarter was a beauty, too. The company reported revenue growth of 17% for the quarter (6% growth on worldwide case volume – the highest since 2002) and earnings per share growth of 14%. And perhaps most importantly, things appear to have turned around in every single market except the U.S. (which is giving Coke only anemic growth). Isdell has turned this stock into a story of international diversification that everyone is looking for, Cramer says. Coke is getting 17% unit case growth in Africa, 16% in Eurasia, 11% in the EU and 7% in Latin America. And even though America isn’t performing particularly well, those R.O.W. numbers speak for themselves, Cramer says.

Isdell took a played-out, tired company and injected life back into it. He’s got exciting new products, he’s gone beyond the carbonated flagship beverage Coke has hinged itself on for so long, and he has masterminded a turn fueled mostly by international growth. This is a man you can count on, Cramer says, and we’re still in the first inning.

Bottom line: This is just the beginning for Coke. Cramer thinks you can get in on the ground floor here and as long as Isdell is at the helm, KO is a buy.

Questions? Comments? madmoney@cnbc.com

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