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Coke Is a ‘Recession-Proof’ Stock: Analyst

Coca-Cola bottles
AP
Coca-Cola bottles

Is Coke still a buy? Absolutely, says independent analyst David Silver.

He's not the only one. Coca-Colacame out with better-than-expected earnings on Tuesday, sending shares higher in midday trading.

"I would definitely still be buying. Despite any problems in the economy, this is one of those recession-proof stocks. They have a good, solid dividend. They have tons of cash on hand, and I expect another dividend increase in the next three to six months," he said.

Coke's global revenue rose 5 percent in the fourth quarter to $11.04 billion as it gained market share in several drink categories. Analysts on average were expecting $10.99 billion.

The soft-drink seller's performance, says Silver, was thanks to volume levels — which rose 3 percent worldwide last quarter.

"Volumes are keeping up with their growth forecasts. The big question they answered was that their volumes can increase, despite a struggling global economy," said Silver.

The company also managed to increase volume without cutting prices.

"They actually increased prices about 2 percent in North America during the third quarter —their largest segment," said Silver.

This performance is keeping "The Real Thing" ahead of its main rival, Pepsi.

"I think they're light-years ahead of Pepsi. That's not going to change any time soon. Around the world, Coke still has a lead in many markets," said Silver.

PepsiCo will announce its earnings results on Thursday, February 9.

Additional News: Coca-Cola Earnings Top Extimates; Shares Climb
Additional Views: Coke, Pepsi Downgraded by UBS_________________________

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Disclosures:

Daniel Ernst personally owns KO shares.

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