Coca-Cola Amatil Ltd (ASX: CCL) shares have rallied strongly over the last week ahead of its half-year results announcement on Wednesday 20 August. Since dipping as low as $9.36 on Wednesday last week, the shares have since climbed as high as $9.67 – a rise of 3.3%.
It is impossible to tell how the shares will behave tomorrow when the results are released. While they could remain flat, they could also rise or fall sharply depending on a number of factors such as the dividend amount, net profit and outlook. Investors will also be eager for an update on the company's strategic review being undertaken by its new management team, as well as how the company's pricing battle with Schweppes is going.
Regardless of what happens tomorrow or in the short term, here are three reasons why Coca-Cola Amatil deserves a place at the top of your watchlist…
- Brand Strength. Coca-Cola Amatil has rights to distribute some of the world's most valuable brands in various regions across the globe. Regardless of the how aggressive Schweppes is with its pricing, Coca-Cola's products will always remain dominant on the shelves.
- Yield. In light of the low interest rate environment, investing in high-yielding dividend stocks is one of the best ways individuals can recognise superior returns. According to Morningstar's estimates, Coca-Cola Amatil will pay a total 45 cents in dividends per share in FY14, putting it on a yield of 4.7%, franked to 75%.
- Long-term opportunity. Granted, the short-term issues facing the business are concerning and would certainly be enough to deter day traders or those with a short-term focus. But investors with a long-term focus recognise the incredible opportunity facing them. After all, Coca-Cola Amatil's shares are hovering around levels not seen since mid-2009.
An even better bet than Coca-Cola Amatil
Coca-Cola Amatil is a high quality corporation trading at a very reasonable price. I happily bought shares at $9.39 and intend to hold onto them for a very long period of time.
