Coca-Cola Has Seen Recessions Come and Go

Further, Coke has successfully re-positioned itself amid the consumer trend toward health and sports drinks (POWERade, vitaminwater) 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 the U.S. The First Call FY2009/FY2010 EPS estimates for KO are $3.07 to $3.43.

Technically, as noted Coke's stock has retreated from highs near $60 in the past month, and has dipped below the key, 50-day moving average. The dip below the 50-day MA will be monitored, and will become a concern if it persists: that's not expected. Hence, view the pull-back as a buy opportunity: KO had rallied from $42 to $60 in 2009, so some year-end profit-taking was in order and normal.

2010 Outlook: Coca-Cola is a long-term play, but if you're looking to sell KO within the year, take your profits after it rises to $59, if it fails to trade above $60.

Stock Analysis: Coca-Cola is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in KO now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your KO position before March 2010. Sell/stop loss if you were to buy shares in this company: $27.

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