Drink in the Profits with this Worldwide Powerhouse: The Coca-Cola Company (KO)

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In the last 3 months, Coca Cola is up 1.24%, PepsiCo is up 5.24%, and Dr. Pepper Snapple Group is up 5.36%. In this same time frame, the Dow Jones Industrial Average is up 8.78%. The underperformance of the sector and overall market leads me to believe that Coca Cola is poised to rally in the coming months. I see a return to $40 per share in the next 3 months, and a rise to $43.80 by the end of 2013, based on 20 times earnings. This would bring the yield down to 2.3%, so I also believe that the dividend will be raised to $1.20, bringing the yield back to 2.75%. Pepsico and Dr. Pepper Snapple Group should continue their run up, with PepsiCo poised to be the top performer in the space. I am initiating an outperform on CAPS for Coca Cola. PepsiCo and Dr. Pepper are buys, but Coca Cola is a STRONG BUY.

The article Drink in the Profits with this Worldwide Powerhouse originally appeared on Fool.com and is written by Joseph Solitro.

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