Coca-Cola: A Golden Oldie

03/19/2014 8:00 am EST


Russ Kaplan is just celebrating his 31st anniversary as a newsletter advisor; here, the editor of Heartland Advisor looks to a leading beverage firm as his latest featured buy recommendation.

Coca-Cola (KO) is a golden oldie; we have owned the shares for many years and I believe that it is a good time to add more of this stock to your portfolio. And for investors who don't have any shares of this stock yet, now is a good time to start investing in Coca-Cola.

Coca-Cola has been in the headlines lately because of a decline of Cola sales in the United States, along with a disappointing quarterly earnings report that came out on February 18. When you have a financially-solid company, such as Coca-Cola, that is able to change with the times, a drop in price represents a good buying opportunity.

Coca-Cola has faced up to these types of challenges over the years. One example that illustrates this fact is when the country became diet conscious, Coca-Cola responded to this change by coming up with Diet Coke, and later, with Coke Zero and Sprite Zero.

Another example of their flexibility was when its product, the New Coke, failed, and it transitioned right back to its regular Coca-Cola product.

Coke has adapted to the decline in cola sales by diversifying its company to include many other drink brands, by buying soft drink companies such as Sunkist and Nestea.

Warren Buffett's Berkshire-Hathaway Company (BRK-B) purchased 9% of Coca-Cola in 1988 and has shown no intention of selling. Also, Coke’s officers and directors, the people most in the know, own 5.8% of the company with no reports of their indication of selling either.

Recently, Coke has plowed into new territory with a 10% acquisition of Green Mountain Coffee (GMCR), which owns the Keurig hot and cold beverage platform, this coffee maker will transfer any home into its own private beverage machine.

Some of you may already own a Keurig machine and are already enjoying the wide variety of hot drinks that are served by individual cups. The cold beverage machine will come onto the market later.

The company pays a better than 3% dividend while you wait and this is a dividend that, in the past, has been increased frequently.

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