Coca-Cola (NYSE:KO) shares hit climbed near a new high today as the company quarterly results continue to benefit from tremendous growth overseas. In the first quarter, net income grew by 8% to $2.05 billion or 89 cents a share compared with $1.9 billion or 82 cents a share in the year ago period. Analysts were expecting earnings per share (EPS) of 87 cents during the quarter. Total sales grew by 7% on a currency neutral basis and ended up being $11.1 billion during the quarter.

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Pushing Growth Overseas
Coke's numbers were fueled by a favorable mix of pricing and international growth. Overall global volume grew by 5% during the quarter, with growth across every geographic operating region. In North America, volume grew by 2%, an impressive feat given the overall high per capita Coke consumption in the United States. Yet, international volume growth was 6%, triple the domestic growth rate. Growth in more developed nations like the U.S, Germany and Japan was positive across the board. Not surprisingly, growth was greatest in regions where Coke consumption still remains low by modern standards. In China, volume grew by 9% while India experienced a 20% jump in volume.

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Coke Equal Cash
Coke's ability to make money from its product sales is with little equal in business. Operating income of $2.5 billion represents a near 23% margin on sales. Only a handful of companies including Apple (Nasdaq:AAPL) and Microsoft (Nasdaq:MSFT) have demonstrated that they can earn such margins on a large sales base. Coke's cash generating ability stems from its unique privilege of having pricing power. That pricing power has tremendous leverage when it's applied to the billions of servings Coke sells each month. As a result, Coke has been able to generate a return on equity in excess of 20% for decades. What often goes forgotten is that the shares yield a 2.8% dividend. Shares jumped by 2% on the earnings news and trade for $74, which is near an all-time high. Rival Pepsico's (NYSE:PEP), shares yield 3.1% and has also been a strong performing stock will report its quarterly results later this month.

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The Bottom Line
Going forward, if Coke can continue its strong growth overseas along with a respectable growth in its saturated markets, shares could continue to mark new highs in 2012. With a solid dividend yield, Coke is a quality bet in a low interest rate world.

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At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

Tickers in this Article: KO, AAPL, MSFT, PEP

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