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Coke Stock Is Today's Dow Winner

By Dan Dzombak - Apr 16, 2013 at 1:33PM

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Coke is leading the Dow higher after better than expected first quarter earnings.

The Dow Jones Industrial Average (^DJI 1.10%) is rebounding after yesterday's big drop. As of 1:15 p.m. EDT the Dow is up 142 points, or 0.97%, to 14,741. The S&P 500 (^GSPC 1.72%) is up 1.24% to 1,572.

There were four U.S. economic releases today.

Report

Period

Result

Previous

Consumer price index

March

(0.2%)

0.7%

Core CPI

March

0.1%

0.2%

Housing starts

March

1.04 million

968,000

Building permits

March

902,000

939,000

Industrial production

March

0.4%

1.1%

Source: MarketWatch U.S. Economic Calendar.

The two to focus on are the housing numbers. February's rate of housing starts was revised upward from 917,000 to 968,000. In March, housing starts rose to a seasonally adjusted annual rate of 1.04 million -- the highest level since late 2008.

Growth in housing starts for both February and March is good news for the ongoing recovery of the housing market, which has been strengthening over the past year. There are worrying signs ahead, however: Building permits dropped in March from 939,000 to 902,000. Building permits are a leading indicator of future housing starts. While permits were down 4% month over month, they are still up 17% from March 2012.

US Housing Starts Chart

US Housing Starts data by YCharts.

Coke stock leads the Dow
Today's Dow leader is Coca-Cola (KO 0.16%), up 5.6% to $42.35 after it reported first-quarter earnings. The company earned $0.39 per share, or $0.46 when you exclude one-time items. That's better than the year-ago quarter's $0.45 and better than analyst expectations of $0.45. Revenue was $11.04 billion, down 1% from the year ago but better than analyst expectations of $11.02 billion. Worldwide, the company saw 4% growth in volume, with 3% growth in the U.S. and 5% growth abroad.

In the U.S., Coke announced that it will sell some of its internal bottling operations to its five U.S. independent bottlers: Coca-Cola Bottling Co. Consolidated (COKE 1.59%), Coca-Cola Bottling Company United, Swire Coca-Cola USA, Coca-Cola Bottling Company High Country and Corinth Coca-Cola Bottling Works. No details were released, but the company did say it expects to close the deals in 2014.

Long-term Coke shareholders should be concerned by the rising tide against soda in the U.S. However, Coke's diversification into global markets and other beverages like juice and tea both cap this risk over the long run.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,996.68 (1.10%) $359.49
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$64.40 (0.16%) $0.10
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,127.60 (1.72%) $69.76
Coca-Cola Bottling Co. Consolidated Stock Quote
Coca-Cola Bottling Co. Consolidated
COKE
$566.40 (1.59%) $8.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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