Coke OK

Coca Cola reared its tired old head and reported better-than-expected earnings this week, which lifted the stock almost 3%. Sales were a bit soft, but the good earnings were a welcome sight for the sore eyes that have watched Coke's demise over the last four years. Coke also announced a 12% hike in their dividend. The hike got very little news, but we think the dividend action is more important than the earnings report. Coke has been showing modestly improving earnings and dividends for the last year or so. But Coke has a history of painting their earnings, so the good earnings alone would not be all that impressive to us. The fact that they increased the dividend in line with earnings growth and at a higher rate than they did a year ago, gives us just the hint that Coke may, indeed, be turning it around. We have said that before and been wrong. This time the atmosphere surrounding the earnings report was much more upbeat than any for a long time. Coke is very cheap and a fallen angel on Wall Street. If they can put together a few more quarters of good sales and earnings, we suspect the Wall Street crowd who abandoned KO will come roaring back. We guess $50 per share is pretty easy pickings. We have said that before too. Hang in there!