Warren Buffett’s Favorite Stock Just Hit Our Buy Zone

He's the most famous investor in the world. He's the Oracle of Omaha, the world's second richest man. And one of his most favored stocks is ready for takeoff again.

Warren Buffett made his fortune buying stocks right before they were set to blast off. It might seem like magic - somehow, he just knows when a stock is poised for breakout. But it's not.

Buffett learned investing from Benjamin Graham, which means most of his decisions are data-driven, carefully researched and thought out. Using Graham's lessons, Buffett has been able to build a fortune through massive gains on relatively conservative bets.

Of course, learning everything there is to know about every stock can be tedious. Early on, Warren Buffett didn't have access to the same wealth of information we do now.

While investors still need to thoroughly consider the pros and cons of their investments, algorithms can help them do this more efficiently.

But what makes it really easy is when a top-notch algorithm and the world's greatest investor are on the same page.

This week, one of Buffett's favorite stocks hit the "Buy Zone" on our Money Morning Stock VQScore™ system. This is something that has now occurred two times in April.

And that's no coincidence. Our proprietary system gives investors insight on the exact moment when a stock is about to erupt. Stocks receive a VQScore that tells us which stocks are great buys right now, meaning they are great companies with immediate breakout potential.

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This company makes one of Buffett's favorite products - one you can regularly find on his desk at all hours of the day. It has a big year ahead, expanding into new product territory after a key acquisition.

The iconic American company just delivered a solid earnings report, beating revenue expectations of $7.88 billion with $8.02 billion.

Best of all, it has a VQScore of 4.45, making it a "Buy"...

Warren Buffett's Favorite Stock

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Shares of Coca-Cola Co. (NYSE: KO) popped Tuesday after a solid earnings report and newfound success in product innovation.

The company has been shifting away from sugary drinks to incorporate more water, sports drinks, and Zero Sugar beverages into its product portfolio. And that has been a winner for the firm.

On Tuesday, Coca-Cola reported earnings per share of $0.48, a figure that topped Wall Street expectations by $0.02. Revenue for Q1 came in at $8.02 billion, which beat expectations of $7.88 billion.

The firm reported that volumes of sparkling soft drinks increased by 1% year over year, while Coca-Cola Zero Sugar experienced double-digit growth for the sixth straight quarter.

The firm is also on the verge of starting a new era. Following its annual shareholder meeting on Wednesday, April 24, it will likely see CEO James Quincey take over as chair of the board. He plans to assume this role from Muhtar Kent, the previous CEO from 2008 until 2017.

Why KO Stock Is a Buy

While the company said that Argentina remains a challenge and fourth-quarter earnings were largely a "blip" on the radar, the firm saw growth in non-traditional products.

And that is setting the company up for future success. Next year, the firm will unveil a coffee-infused drink that puts Starbucks Corp. (NASDAQ: SBUX) in its crosshairs. Coca-Cola recently closed a $5 billion acquisition of Costa Coffee - the second largest coffee brand after Starbucks.

Some investors are concerned that, by entering the coffee space, Coca-Cola will cannibalize its own iconic soft drinks. However, consumers have shown an increasing preference for sugar-free drinks and flavored sparkling waters, while public policy makers have taken aim at KO and its rivals over public health and as a way to siphon taxes out of consumers.

The state of California is working on a state-wide tax that would add a $0.02 tax for every ounce of sugary fluids in the coming years.

Coca-Cola has also pushed into the sports drinks category with a minority stake in a "better-for-you" product called BodyArmor. That product has erupted on the scene and is taking direct aim at PepsiCo Inc. (NYSE: PEP) and its Gatorade brand.

Some will argue that Coca-Cola is becoming a "total beverage company" because of shifts in public policy. Others will argue that the firm is responding to consumer choice. But dabbling in those debates is what will keep people from doing what really matters.

We want to make money. That's why we want to focus more on the data and less on the story.

Coca-Cola currently has a VQScore of 4.45, signaling that this stock is right in the "Buy Zone" and ready to break out in the coming months.

Warren Buffett agrees. Coca-Cola is one of Buffett's favorite stocks. He has famously said that he would never sell a single share of the $1 billion stake he took (back in 1998). Buffett had cooled his view on Coca-Cola in 2018 due to changes in consumer diets and competition from private labels. However, the company has responded with bold new products and strategies to address such concerns. With shares trading just under $48 per share, investors have an opportunity to buy a global brand that pays a reliable 3.3% dividend yield.

This is a stock to hold for the long haul.

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