A little more than a year ago, in the Fool's annual "Stock Madness" competition, I advocated the stock of venerable Coca-Cola (NYSE:KO) for the title of "best stock on Earth."

By tournament's end, Coke had been defeated, eliminated in the third round by UPS (NYSE:UPS), which was in turn eliminated by Netflix (NASDAQ:NFLX), which went on to lose the tournament to Sirius Satellite (NASDAQ:SIRI).

Today, I'm back in Coke's corner, this time arguing that the firm is the "Best Blue Chip for 2007." Before we go over why I think that's the case, though, I think it might be instructive to examine how these four companies have performed since the last contest.

Stock's performance

Since March 17, 2005

Over last 52 weeks













This crystal ball needs a tune-up
As it turned out, the best stock of the four wasn't Coke at all -- it was Netflix. Had you bought Netflix on March 17, 2005, and held through all the ups and downs since, you'd be sitting on an even triple today -- that's the good news. The bad news is that most of those gains came in 2005. Anyone who bought the stock one year ago would have been sitting on essentially dead money for the whole last year. The story for UPS owners looks similar -- their money has been stagnant over both time periods. (And Sirius? I won't even go there -- so you can save the hate mail for another day.)

Coke is it
I said it back in March 2005. I'll say it again today -- Coke is the best investment of the four companies named above. What's more (and more relevant to today's competition), Coke's the best blue-chip investment you'll find in 2007. Unlike Netflix, which has already had its gains, Coke has enjoyed just a slow and steady rise from March 2005 -- meaning that buyers back then have been rewarded somewhat, and buyers today can be sure they haven't missed the boat.

It's not just me saying that, either. Coke got the nod as an official recommendation of Motley Fool Inside Value back in January 2005, when the stock was trading at $40 per share. Since then, the stock has appreciated nearly 17% in price -- and yet it looks like a better bargain today than it did back then. Consider:

January 2005*

November 2006



$1.24 (24% better)

Dividend yield


2.6% (4% better)

Shares outstanding

2.43 billion

2.34 billion (3.7% fewer)

Trailing P/E ratio



*January 2005 numbers taken from the FY 2004 period ended Dec. 31, 2004.
Source: Capital IQ, a division of Standard & Poor's.

So what we have here is a stock paying a much higher dividend today than it was a couple years ago, a dividend so high that despite the stock's growing price, the dividend yield has also grown. And dividends aren't the only way that this cash cow of a company is returning value to its shareholders -- it continues to buy back its stock, making each remaining share more and more valuable.

Blue Coke
It's 120 years old and counting, so Coke's days as a fast-growing start-up are long gone. But if it's a steady grower, a generous dividend-payer, and a stalwart recession-resister you're looking for, Coke is definitely it.

Polls closed for the midterm Congressional elections two days ago, but on Motley Fool CAPS, the voting never stops. If you agree that Coke is the best blue-chip stock for 2007, then head on over to CAPS right now and vote your conscience. Heck, even if you disagree with me, on CAPS you've got an inalienable right to be wrong, so vote for Coke to underperform the market. Get out there and rock the vote, Fools. We'll begin counting the votes today, and announce the winner of the contest early next week.

To read about the rest of our blue-chip candidates, click here.

Netflix is a Motley Fool Stock Advisor pick. UPS is an Income Investor selection.

Fool contributor Rich Smith has no position in any of the companies mentioned in this article. If he did, The Motley Fool would require him to tell you so. We're sticklers about things likethat.