Coca Cola Remains Strong Through Tough Times

Includes: KO, MNST, PEP
by: Chris Katje

Coca Cola (NYSE:KO) raised its dividend last week from thirty eight cents to forty one cents each quarter. The most recent dividend will be paid April first to shareholders as of March 15. Coca Cola has raised dividends thirty seven consecutive years. This shows the strength of the brand and company as many recent companies have cut or eliminated their dividend payments to focus on restructuring and raising additional capital.

In related Coca Cola news, Pepsi announced a deal to distribute Rockstar energy drinks. This brand was previously distributed by Coca Cola. The details are sketchy and just announced at this point. I believe this is Coke's decision to let one brand go (Rockstar which most recently lost market share) and bring in one (Monster which is gaining market share).

The company recently announced a deal to distribute Hansen Natural's (HANS) Monster energy drink. The drink is number two in the world behind Red Bull (privately held). Monster is not even available in some European markets and will be distributed by Coca Cola in those new countries. Letting Rockstar go, as I'm assuming is what happened with the new Pepsi deal, furthers my belief that Coca Cola will buy Hansen Natural within the next three years. The exclusive agreement was signed as a long term deal but I think really is just a preview to see what Coke will be buying.

Vitamin Water continues to sell well as consumers shift from carbonated drinks to helathier options. The company has great athletes promoting this brand. The company has room to expand with new flavors and new sizes of the drink.

I recommend buying shares of Coca Cola below $45 with a target of $60 by 03/01/10. Also recommend buying shares of Hansen below $35 with a long term target of $50 (by a buyout of Coca Cola).

Stock position: None.