I think most investors would agree that Warren Buffett's purchase of shares of Coca-Cola (NYSE:KO) in 1988 for Berkshire Hathaway (NYSE:BRK-A) qualifies as a pretty good investment. A few years ago, given the size of the bet made, and the higher share price that Coca-Cola enjoyed at the time, it might even have qualified as one of the better value investments ever. Over the last couple of years, Coca-Cola hasn't really been winner in the capital gains department, though it's still been a solid dividend payer.

What was it that made Coke seem to be such a great buy in 1988? One for which Warren Buffett was willing to commit such a huge percentage of his stash? I was re-reading Robert Hagstrom's second edition of his excellent book The Warren Buffett Way recently, and I became struck by the remarkable similarities between Coke's economic position at that time and that of a company I currently own a few shares of -- Harley-Davidson (NYSE:HOG).

Let's look at the numbers:



























11% to 17%


For much of the same logic that Coca-Cola made for an attractive investment in 1988, Harley-Davidson could make for one today. The returns on equity are exceptional, the brand loyalty around each company provides a substantial economic moat protecting sales, and a period of international growth lies ahead. That isn't to say that the business models are exactly the same (people aren't purchasing new six-packs of Harleys every week), or that the risks or the opportunities that each has are the same. But on the raw-numbers basis, well, it's not every day that you find numbers matching up that closely from two decades apart.

Why Harley's worth a look
I bring up the comparison not to sell you on the idea that Harley-Davidson is a stock that Warren Buffett is likely to buy (though pundits have for years been speculating that it meets his requirements), or that its shares should interest you in any way. No, I'm really just kind of fascinated in the symmetry of the numbers, and it makes me that much more interested in studying precisely what Buffett was thinking in 1988. You can find that sort of information in his shareholder letters. I'll just quote his prose from the 1989 letter:

This Coca-Cola investment provides yet another example of the incredible speed with which your Chairman responds to investment opportunities, no matter how obscure or well-disguised they may be. I believe I had my first Coca-Cola in either 1935 or 1936. Of a certainty, it was in 1936 that I started buying Cokes at the rate of six for 25 cents from Buffett & Son, the family grocery store, to sell around the neighborhood for 5 cents each. In this excursion into high-margin retailing, I duly observed the extraordinary consumer attractiveness and commercial possibilities of the product.

I continued to note these qualities for the next 52 years as Coke blanketed the world. During this period, however, I carefully avoided buying even a single share, instead allocating major portions of my net worth to street-railway companies, windmill manufacturers, anthracite producers, textile businesses, trading-stamp issuers, and the like. (If you think I'm making this up, I can supply the names.) Only in the summer of 1988 did my brain finally establish contact with my eyes.

As always, Buffett is overly modest. During the years that he was investing in anthracite and trading stamps, he was making huge amounts on his investments in equally obscure companies. But sometimes there's money to be made in the huge, obvious consumer giants -- when they are available at the right price and under the right management.

The Foolish bottom line
Like any stock, consumer giants can have years of poor returns despite growth in the business. It happened to Coke in 1998, and it's happening to Harley over these past few months. Today, even familiar names such as Schering-Plough (NYSE:SGP), Campbell Soup (NYSE:CPB), Disney (NYSE:DIS), and Pfizer (NYSE:PFE) are valued for less than what they were in 1998.

David and Tom Gardner have been looking at these opportunities and balancing them against a number of other attractive opportunities in the market right now. Their recommendations at Motley Fool Stock Advisor have a five-year track record of beating the market, and they take pride in educating our members about how to do so on their own.

By joining Stock Advisor, you'll be able to discern whether the opportunities of today are more like those of Coca-Cola in 1988 or 1973. You can try out the service with a totally free, no-obligation 30-day pass.

Bill Barker owns shares of Harley-Davidson but none of the other companies mentioned in this report. Coca-Cola, Berkshire Hathaway, and Pfizer are Motley Fool Inside Value recommendations. Disney is a Stock Advisor pick. The Motley Fool has a disclosure policy.