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Coca-Cola Stock Gets Big Buy Targets with 20% Upside

SunTrust Banks (STI) initiated its coverage of Coca-Cola (KO) stock this week with top marks for the soft drink giant and consumer staples darling. KO stock gets a “buy” recommendation with a $47 price target.

Separately, Credit Suisse (NYSE:CS) set a $48 price target for Coca-Cola stock on June 19 with an “outperform” rating.

Seems like now may be the time to drink up this mega-cap, considering shares are under $40 right now.

After hitting a 52-week high above $43 earlier this year, Coca-Cola has rolled back amid the recent volatility. In fact, all told it has underperformed the broader stock market in 2013 by a hair despite optimism to start the year.

But Coke is hardly cooked.

Coca-Cola, one of the 30 blue-chips that make up the Dow Jones Industrial Average, is an iconic consumer staples stock with a bulletproof brand and a great global footprint. KO is incredibly stable with a 2.8% dividend and operating cash flow of over $10 billion. Oh yeah, and it’s a darling of Warren Buffett’s, with Berkshire Hathaway (BRK.B) owning 400 million shares for about 9% of the entire company.

In its last earnings report, Coca-Cola topped EPS forecasts by a penny on earnings but missed revenue slightly as sales declined less than 1%. Wall Street will be closely watching the stock in mid-July as it reports earnings again, and another miss on the top line could be bad news.

But KO is isn’t going anywhere even if it does face short-term volatility, either because of poor earnings or because of broader market pressures. Yes, a focus on healthy eating in the U.S. has caused growth to flatline, but the potential of emerging markets and frontier markets remains robust. And while companies like Pepsi (PEP) and Dr. Pepper Snapple (DPS) are also in the soft drink game, none of them can challenge Coke when it comes to reach and management.

Furthermore, even if Coca-Cola can’t find big growth it remains a dividend machine, which makes it a great long-term investment even if shares don’t do much by themselves. KO has paid dividends since 1893 for Pete’s sake!

Coke may not be for everyone, since it’s hardly a fast-moving growth stock. But it has a lot of potential for patient investors — especially after this pullback and optimism from analysts.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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