Coca-Cola Amatil Ltd, Woolworths Limited and National Australia Bank Ltd: Should you buy?

The S&P/ASX 200 (INDEXASX: XJO) is falling hard. Could this be your opportunity to buy shares in Coca-Cola Amatil Ltd (ASX:CCL), Woolworths Limited (ASX:WOW) or National Australia Bank Ltd (ASX:NAB) on the cheap?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 (INDEXASX: XJO) has managed to trade higher today but is down around 3.5% in the past month.

Since 2012, a market rally driven by record low interest rates, both domestically and abroad, has forced investors to go in search of blue chip stocks which pay handsome dividends. The banks, Telstra and two supermarkets giants have all been beneficiaries of investors looking for a decent return on their money.

However, some are suggesting US interest rates could rise sooner, rather than later. So investors who want exposure to a stronger American economy are busily pulling their money out of the local market, taking the AUD down along the way.

But who can blame them, the Aussie dollar has been tipped to fall for many months and many Aussie blue chip stocks are still too expensive to justify a purchase.

However a lower market will prompt some income investors to put their money to work in seemingly discounted blue chips. Three renowned dividends payers are Coca-Cola Amatil Ltd (ASX: CCL), Woolworths Limited (ASX: WOW) and National Australia Bank Ltd (ASX: NAB).

CCA is Australia's bottler and distributor of Coca-Cola and Beam branded products. Its share price has fallen around 25% this year as the group struggled to deal with competitive pressures and tough trading conditions in Indonesia – its key growth market. At current prices, CCA stock appears cheap, but investors must be content with modest growth and the possibility of a very volatile share price because turning around a $7 billion company isn't easy.

Unlike CCA, Woolies has proven to be an excellent company to buy and hold over the past decade, but, in recent years earnings growth has been harder to come by. Woolies, along with rival Wesfarmers, dominates the domestic grocery market and general retail and liquor markets through brands such as Big W and Dan Murphy's. The group's investment in Masters home improvement stores will take longer than expected to turn a profit but appears worth the wait. However, I believe shares trade around fair value at current prices because I find it hard to imagine them outperforming the broader market from here.

Lastly, NAB shares have been volatile today as investors tried to predict the outcome of the Scottish independence vote, which is currently being counted. A "Yes" vote for independence will have some effect on the bank's UK operations in terms of costs associated mostly with moving the head office of Clydesdale Bank. However, NAB's UK woes go deeper than potential Scottish independence and until it can divest away from its UK subsidiaries or pay down its portfolio of bad debts, I can't see it outperforming its Australian peers.

Our #1 Dividend stock idea – Yours FREE! 

Motley Fool Contributor Owen Raszkiewicz is long June 2016 $5.40 Warrants in Coca-Cola Amatil ltd. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »