Motley Fool Inside Value recommendation Coca-Cola (NYSE:KO) is finally showing some life where it really counts. After falling short of its 3% to 4% annual volume growth target (it was 2% last quarter), volume in the third quarter increased 5%. Better yet, operating income increased 9.7% before charges, and net income jumped almost 9.9%.

Some will note that Coke is still not growing beverage sales as fast as rival PepsiCo (NYSE:PEP) is. But investors have been looking for new life at Coke since CEO Neville Isdell took over in June 2004 -- and there is good news.

Carbonated drink volume grew only 2% -- down 1% from the second quarter -- but the company maintained its market share. Non-carbonated drinks excluding water rose 13%, and water was up an impressive 21% (both are 2% higher than last quarter). Coca-Cola increased market share in sport drinks, juices, and juice drinks.

While the company has already used $1.6 billion to buy back shares this year, it has also cut total debt by almost $3 billion. At the end of 2004, Coca-Cola had a net debt (debt minus cash) of $410 million. Now there is net cash of $862 million. If that doesn't convince you that Coca-Cola is a cash cow, nothing will.

Investors would be wise to note that Coca-Cola's revenues and per-share earnings marginally beat analyst projections this quarter. After a period of what I'd call disappointing results, Coke may finally have reached the point where it meets and exceeds Wall Street expectations as growth in non-carbonated drinks and water, combined with relative pricing stability, enabled it to post strong results for the third quarter.

Is Coca-Cola at the point where 9% to 10% annual earnings growth is possible? This observer thinks so, though the next few quarters should be telling. And, because analysts are looking for 8.1% annually over the next five years, there is earnings surprise potential here -- the stuff of outperformance.

Coca-Cola stock was trading for more than $60 a share five years ago. In mid-afternoon trading, the stock is changing hands at $42.29 a share and yielding a tempting 2.7%. Given the improved balance sheet, I'd say this stock warrants consideration.

Are you looking for great companies, like Coke, selling for less than intrinsic value? If so, try a free trial subscription to The Motley Fool's Inside Value newsletter.

The Motley Fool has kicked off its ninth annual Foolanthropy campaign! Nominate your favorite charities on our Foolanthropy discussion board through Nov. 1. For guidelines on what makes a charity Foolish, visit www.foolanthropy.com .

Fool contributor W.D. Crotty owns shares in PepsiCo. Click here to see The Motley Fool's disclosure policy.