Coca-Cola is still the real thing

Regardless, this remains a dangerous market, hence discretion and defensive plays represent the better part of valor, and capital preservation. With the aforementioned in mind, risk-tolerant investors should consider Coke.

The Coca-Cola Company (NYSE: KO) is part metrics-play/part intuitive-play. An iconic brand, Coke's success walks hand-in-hand with the development and success of the United States during the American century.

It's not surprising, then, that when the nation experienced its decade of descent, 2001-2008, so did Coke: incredibly, Coke's shares are basically unchanged since January 2001. Or, perhaps given the financial and economic tumult of recent years, a better way to look at that is: Coke is still around $40 a share and has a demonstrated business model in established markets, with reasonably predictable earnings. Typically, that's not the stuff of investor elation: in these times, it's a scarce commodity.

What's more, Coke has successfully re-positioned itself amid the consumer trend toward health and sports drinks (POWERade, Dasani water) and away from carbonated drinks. That said, the 'big 4 carbs' -- Coca-Cola, Diet Coke, Fanta, and Sprite -- are doing nicely internationally, thank you, which will more than offset volume declines in the signature cola brand in los Estados Unidos. The bursting of the commodity bubble has also taken pressure off ingredient costs. The First Call FY 2009/FY 2010 EPS estimates for KO are $3.13 to $3.38.

What should one not expect from KO? Outsized revenue gains, and radical departures from a demonstrated business model. What should investors expect? The ability to sleep well at night because, as the Wall Street adage has demonstrated for decades, 'No one ever went broke holding Coke.'

Stock Analysis: Coca-Cola is a low-risk stock. Coca-Cola is an investment, not a trade. Consider buying a 25% position in KO now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your KO position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $27.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.