Why Coca-Cola Amatil Ltd is the best stock you can buy

Here's why you can't afford to miss this opportunity

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The company is in the doldrums, facing pricing pressures from key competitors and from grocery giants Woolworths Limited (ASX: WOW) and Wesfarmers Ltd's (ASX: WES) Coles. Believe it or not though, Coca-Cola Amatil Ltd (ASX: CCL) ("CCA") is the best company that money can buy right now. In fact, I took advantage of the nearly five-year low share price just last week and already I'm strongly considering buying more.

Okay, so it's not the best performing stock at this point in time, but that's the point – that's why it's such a good buy at today's price of just $9.26.

Why has it fallen?

When a company falls in price, it is always important to check whether there is a material reason. That is, whether it has fallen based on relevant news which could impact a long-term investment thesis, or if it has fallen due to completely unrelated reasons.

Since hitting a high of $12.55 early last year, it has been all downhill for CCA. The falls are largely justified, given the profit downgrades issued by the company and its struggling SPC Ardmona division. Its most recent plunge, which saw shares drop more than 18% in the space of two trading days to as low as $9.03, was the result of the company forecasting that NPAT would decline by 15% for the first half of 2014.

Why you should buy

Understandably, current shareholders (those who bought in at $11 a share, or higher) would be upset with the company's performance thus far. But the good news is, the issues appear to only be short-term in nature.

Although new leadership always introduce new risks in any corporation, they can also bring about much needed changes. Alison Watkins, the ex-boss of grain handler Graincorp Ltd (ASX: GNC), recently took over the position of CEO and has undertaken a strategic review of the entire business and will focus on improving productivity and reducing costs. In fact, some analysts believe costs could be cut by as much as $100 million which would greatly improve profitability.

Another key concern which contributed towards the recent plunge in price was the company's prospects in Indonesia. Indonesia has long been seen as CCA's big growth opportunity and while volume growth is still expected to top 10% in 2014, it is being offset by a 20% depreciation of the Rupiah (Indonesia's currency) and increasing wages. However, the region still poses as an incredible opportunity for the company, particularly given its enormous population.

Foolish Bottom Line

The stock could well remain volatile over the next few weeks (or even months) but that should not deter you from making what could be one of the best investments you could make. After all, the best time to buy quality companies is when they are trading at reasonable prices. To make for an even more appealing case, CCA also offers a very generous 5.4% dividend yield.

Motley Fool contributor Ryan Newman owns shares in Coca-Cola Amatil Ltd.

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