CNBC Stock Blog

Coke vs Pepsi—The Better Buy: Stock Analyst

Coca-Cola reported a profit that matched analysts' forecasts Tuesday, while revenue outpaced Wall Street's sales expectations. Is the stock a buy? David Silver, equity research analyst at Wall Street Strategies, shared his analysis of the beverage maker.

Coca-Cola Earns $0.66 a Share

“It’s that emerging market growth where this growth is going to be coming from—North America was disappointing,” Silver told CNBC.

“It’s going to be the growth in China, they’re the number one market leader over there, so that’s where the growth for this company is going to come from.”

Silver has a “buy” rating on Coke and a price target of $65 over the next 12 months.

“It has a solid dividend yield and a solid cash position, which will continue to allow them to expand and invest in their own business,” he said.

Coke’s fourth-quarter worldwide unit case volume, a measure of sales that excludes the impact of foreign exchange on prices, rose 5 percent. The firm said case volume outside the U.S. was up 6 percent, while North American unit case volume fell 1 percent.

“They’re opening up into new sections of China and India every week and they’re investing a lot of money to improve the infrastructure over there, to improve the delivery system,” said Silver.

“The World Cup in a few months is going to be a big win for Coke,” he added.

Coke’s major rival PepsiCo is also expected to report earnings later this week. Silver told investors that Coke’s shares are still a better buy.

“Pepsi has a lot more exposure to commodities with respect to its Frito-Lays and Quaker Oats…when commodity prices were falling, it gave more wiggle room on the bottom line,” he said.

“But now that commodity prices are probably going to increase in the next year to year and a half, that opens up the door for Coke to expand their lead.”

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Silver does not own shares of Coke or PepsiCo.