Watch This Stock on April 24

Andy Snyder|April 12, 2023

Everybody’s talking about inflation figures this week.

Is all that free money from the Fed still pushing prices higher… or has the Fed’s about-face destroyed enough of the banking sector to pull prices lower?

As usual, most investors have missed the mark.

The supply chain jolts have come and gone. The pandemic ripples have flattened out. All that remains now is good old-fashioned greed.

The question is whether companies can suck enough pennies out of consumers’ pockets to send their profits to fresh records before the saps figure out what’s going on.

That’s why we’ll be watching the earnings announcement from Coca-Cola (KO) on April 24 with great interest.

Back in February, Coca-Cola CEO James Quincey gave away the company’s inflation secret.

It’s not raising prices because it has to. It’s raising them because it can.

Quincey said his company has “earned the right” to charge its customers more. Through years of strong branding, massive global marketing spending and, the biggie, buying up the competition, the company has won the right to charge what it wants.

We’re seeing this phenomenon not just in soft drinks… but everywhere.

“It’s not our strategy to think of our business as commoditized, where prices just flow up and down in a kind of mechanical way. We need to own our pricing by delivering for the consumers the value that they appreciate,” the big boss said.

Not every company can pull it off.

The ones that can… are the ones you want to own.

While what’s happening with Coca-Cola shows up as a slice of the CPI and the PPI reports, those government figures also contain a lot of garbage and noise… the stuff the folks in charge want us to see.

The real state of the economy will be revealed by companies like Coke. When it begins to complain that consumers are getting squeezed, that’s when we’ll need to worry.

We’ll find out whether that day has come on April 24, when the company opens its books once again.

For now, it’s raising prices. Consumers haven’t winced yet.

It means there’s still far too much money in the economy. If the folks at the Fed don’t continue to raise rates aggressively, they are crazy, dumb or being manipulated.

Until Coke gets so expensive that folks buy less of it… we’ll know there’s still too much money out there.

For now, it’s the sort of stock you want to own.

It’s boosting its margins simply because it can.