I'll admit it. I grew up as a PepsiCo (NYSE:PEP) sipper until my wife converted me to a Diet Coke-swigging bore. My cola loyalty aside, I'm not a fan of buying Coca-Cola (NYSE:KO) at these lofty prices. Yes, lofty prices. Coke shares may have fallen from what were dizzying heights, but I still wouldn't pay 20 times earnings for a company growing the bottom line at a fraction of that multiple.

Tim Beyers disagrees with me. Philip Durell did, too, when he made Coke an Inside Value recommendation. You may very well disagree with me. Let me see if you still feel that way by the time I'm done.

The Coke's on you
Coke isn't much of a speedster. The company's net profits have grown from $4 billion in 2001 to $4.9 billion in 2005. It may seem like a lot, but when you're as big as Coke, that only translates into annualized growth of a little more than 5% over the past four years.

Net Income % Change
2001 $3.969
2002 $3.050 -23.2%
2003 $4.347 42.5%
2004 $4.847 11.5%
2005 $4.872 0.5%
* Net income in billions, from Coke's 10-K filing

If you prefer to lean on operating cash flow as a better indicator than reported profits, you'll have to go back three years to find the last time that Coke produced double-digit growth in operating cash flow.

I can't argue against Coke as a killer brand. It's a globe-trotting hottie on that front. But it's also a slow roller at this mature state. Investors are harming their portfolios by assuming that just because Coke is cheaper today than it was a few years ago, it's cheap, period. It's not.

If there's some major growth catalyst on the horizon, I'd love to hear about it. So far in 2006, total revenues are up a mere 2%. Pre-tax profits are up just 6%.

"We delivered another quarter of solid growth based on balanced performance across our global markets as well as our product portfolio," CEO Neville Isdell said after the company's second quarter. "Through effective execution of our strategy and investments in key marketing initiatives such as the World Cup, we delivered 4% unit case volume growth ..."

What? You go, World Cup. Woo hoo to 4% growth!

Checking in with Seth
I'm not the only bear on Coke. Seth Jayson was originally slated to be this week's bear, and he shared some of his concerns with me earlier this week. He, too, thought that the stock's valuation was out of whack. He also voiced his displeasure with "the growth initiatives from the new head of marketing."

I've come to realize that I can't remember the last time I saw a memorable Coke advertisement. Really.

Coke is big. Too big. That may help the company as it makes a run at Hansen Natural (NASDAQ:HANS) in the energy-drink market, but the company will never be as cool as Jones Soda (NASDAQ:JSDA). It will never be nimble.

Because of Coke's girth, even if it scores with a popular new beverage or makes a big splash in some global region, that accomplishment won't be a material contributor. In fact, there's more downside risk, because Coke is already pretty well entrenched everywhere. That leaves us with a company trading at lofty multiples with limited upside.

If I'm wrong about that, even Coke will be surprised. Two years ago, it lowered its long-term goal to growth of just 3% to 4% a year in unit case volume, and bottom-line gains of 6% to 8%. If I staged a blind taste test and asked you to price a company that set the bar that low, would you really be paying as much as investors are paying for Coke these days?

The only thing that isn't limited at this point is the downside. Coke has gone from a global darling to a moving target. Between allegations of unfair labor practices in India and Colombia to suffering stateside as schools give carbonated fizz the boot, Coke is pretty vulnerable right now. Even this month's situation in India, in which Coke had to defend itself against accusations that its sodas were tainted with pesticides, indicates the volatile world that will keep Coke's growth in check, if not dog it entirely.

The more I think about it, the more I now realize that my wife tricked me into ditching Pepsi for Coke. Don't make the same mistake.

Even after all this, if you still disagree with the bearish case on Coke, you may want to check the Inside Value newsletter service to see what Philip is thinking about Coke at the moment and explore dozens of other low-priced stock opportunities.

Think you're done with the Duel? You're not! Go back and read the other three arguments, and then vote for a winner.

Longtime Fool contributor Rick Munarriz does drink Diet Coke, but he's likely to drink less this year than he did last year. He does not own shares in any of the companies mentioned in this article. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.