Coke Outpaces Recession

Shares of Coca-Cola (KO) headed down today after the company reported a fine second quarter. Investors are apparently concerned that, despite profits rising by 43 percent, revenues were a little soft, at $8.3 billion, or a bit under (oy) "analysts' expectations" of $8.7 billion. Shares were down by more than 2 percent in late trading.

The stock will likely head up again after Wall Street's short-term vultures have finished gnawing at it. Barron's Teresa Rivas, in a pun-heavy column, offers some reasons why.

The stock "should eventually deliver sweet returns," she wrote, because, besides profits being on the upswing during a recession, volume sales are increasing in a big way around the world—the exception, of course, being in North America, where consumers are buying less soda pop. In India, though, volume sales were up 33 percent; in China, 14 percent. Altogether, volume sales rose by 4 percent. Pretty decent, given that soda pop represents the most discretionary of discretionary spending.

And even in the United States, lower pricing and the company's expansion into noncarbonated beverages are helping Coke hold on to sales. Volume here fell by a relatively modest 1 percent.

At the same time, commodity costs fell sharply over the quarter. And much of the sales decline is due to currency fluctuations, the company said.

Coke also reiterated that it is open to making long-term agreements with its bottlers, which would mean avoiding the strife that has afflicted PepsiCo's (PEP) relationships with its bottlers after that company said it was planning to acquire two of them, both of which rejected the offer.