Back on Feb. 17, as the market was on sell-off mode, I recommended buying The Coca-Cola Co. (NYSE: ).
The stock is up some 16% from our entry point. That’s because Coca-Cola recently reported a near-20% jump in profit, which soared to 67 cents a share, excluding restructuring charges.
Coca-Cola beat earnings, increased guidance, increased dividends and reinstated its stock buyback program. The company plans to repurchase $1 billion in shares of stock in the second half of 2009. What more do we need? The answer is: Consistent performance.
As I tracked the developments in Coca Cola and their global markets, I ascertained that my original view remains unchanged and Coca Cola should keep growing profits consistently, which should keep propelling its stock up.
Remember, on March 9, a few of weeks after our Coca Cola recommendation, I called the U.S. market turn by recommending a pro-cyclical energy play with Diamond Offshore Drilling Co. (NYSE: ). That call coincided with the turn on Diamond Offshore stock as well, which has since soared about 67%.
Earlier, on October 27, I had called for the turn on iShares MSCI Brazil Index (NYSE: EWZ), which has since soared more than 90%.
The point is that emerging markets, as was my thesis, are going to turn around much faster and come back much stronger than developed economies.
Prudent emerging economies – like Brazil and Chile – having enjoyed a few years of exponential growth in commodity prices did not over-extended themselves.
