Coke is It! - Navellier's New Favorite

08/29/2002 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Typically, Louis Navellier looks for five stocks each month to recommend to subscribers of his Blue Chip Growth Stock newsletter. Money Show attendees, however, learned that only one stock met his strict fundamental criteria to be rated a "buy" for September. Read why this highly successful money manager and newsletter advisor believes “Coke is it…"

Coca-Cola (KO NYSE) is benefiting from a weaker US dollar that is helping to boost profits on its vast international operations. Coke is one of the largest and most well-respected companies in the world. The company has a market value of over $125 billion. Last year, it generated over $20 billion in sales worldwide. I believe that Coke’s most-prized asset is its brand name – perhaps the strongest and most recognizable in the world. Everywhere you go, on any continent, in any country, people know Coke. This helps explain the company’s phenomenal financial status. Coke is able to maintain gross-profit margins near 70%.”

“Shareholders of Coke have been very well-rewarded over the years. From the 1974 low to 1998, owners of KO increased their investment by 200-fold. Much of this success was due to the late Robert Goizueta, the CEO from 1981 to 1997. Unfortunately, his successor wasn’t as strong, and by 2000, Coke’s stock price lost half its value. The company was also hurt by the stong dollar policy of the US. The good news is that the dollar has finally come down some. Also, I’ve been very impressed with Doug Daft, the company’s current CEO.”

“Last quarter, sales and earnings jumped 15%, which is very impressive considering the current environment. Coke earned $0.52 a share, which was in line with Wall Street’s estimates. The company said it expects to earn between $1.75 and $1.80 a share for the entire year. I think this is a very good time to buy shares of Coca-Cola. Its price is still roughly where it was six years ago. The stock is a very stable performer with clean accounting. Additionally, Coke was the first major company that declared that it would expense its stock options. In our opinion, Coca-Cola has emerged as a new stock market leader.”

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