Coca-Cola Amatil Ltd, Telstra Corporation Ltd and Slater & Gordon Limited: Should you buy?

Could each of these three dominant Australian businesses be ripe for the picking? Or are Coca-Cola Amatil Ltd (ASX:CCL), Telstra Corporation Ltd (ASX:TLS) and Slater & Gordon Limited (ASX:SGH) fully valued?

| More on:

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

A company's stock is generally categorized into one of three different types. Namely: growth, value, or income.

Investors who want a passive income source will usually go with solid blue-chip stocks like Telstra Corporation Ltd (ASX: TLS), whereas those who favour capital gains will likely have their crosshairs fixed on 'growth' stocks such as Slater & Gordon Limited (ASX: SGH). Finally I'm sure value investors will be running their eyes over out-of-favour stock picks such as Coca-Cola Amatil Ltd (ASX: CCL).

When determining what type of stock to buy, there's no hard and fast rules and the characteristics of each are not mutually exclusive. So while Telstra may appear an excellent investment for income purposes, having returned over 40% in dividends over the past five years, it has also experienced share price appreciation to the tune of 67% in that period.

Telstra is a favourite amongst income investors and since interest rates started falling in November 2011, its stock price has rallied over 72%. At current prices however it appears fully valued, given its outlook for only modest earnings and dividend growth.

Slater & Gordon has been a huge success in recent years, providing long-term investors with market-thumping capital gains. The group has now begun an expansion into the UK, where the opportunity for consolidation appears to be available for the taking. I think it could prove to be a great stock to buy and hold for many years.

Lastly, the investment case for Coca-Cola Amatil (CCA) is an interesting one. I think value investors would be looking at CCA's recent share price drop as a solid buying opportunity because its new leadership, competitive advantages and scale will help drive the group's operating margins higher over time. However some investors hold concerns over whether or not fizzy drinks will continue to be in high demand in the future. In addition it's unlikely the competitive pressures the group is facing will fade away anytime soon.

Our #1 dividend stock idea – Yours FREE!

These three stocks offer something to suit every type of investor and I'd love to hold each stock in my portfolio, at the right price.

Motley Fool Contributor Owen Raszkiewicz owns shares in Slater & Gordon and is long Jun 2016 $5.41 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 »