Coca-Cola Amatil Ltd's (ASX: CCL) shares are currently trading at $9.26. While that's a lot better than the $8.19 price tag the shares possessed in October last year, it's a long way off the $15.43 recorded in March 2013.
The stock has had a tough run over the last couple of years, plagued by declining sales, a tougher competitive landscape and lacklustre growth in Indonesia. Indeed, the stock's 40% decline over the last two years has been largely justifiable considering the numerous profit downgrades during that time.
Although the company's immediate future remains unclear, there are actually a number of reasons to suggest that now could be a great time to buy. Here are three reasons why 2015 could be a better year for Coca-Cola Amatil and its shareholders…
1. Greener pastures. In response to its numerous profit downgrades, Coca-Cola Amatil initiated a strategic review to identify methods of improving its overall performance. While it certainly won't be an overnight fix, the company has stated it expects to cut costs by up to $100 million over the next three years, while it will also focus on improving operating efficiency. Pleasingly, the company said in its review that it expects earnings per share (EPS) to grow over the coming years while no more losses should be announced beyond the 2014 financial year.
2. Strong growth. Lack of growth in the company's key Indonesian market has also been an issue for investors in recent years. While many investors remain uneasy about ramping up investment into the division, it has been proposed that Coca-Cola Amatil's parent entity, The Coca-Cola Company (TCCC), will invest US$500 million into the business to drive expansion of production and warehousing. While TCCC will then be entitled to 29.4% of the division's earnings, the deal could still generate substantial returns for Australian investors.
3. Dividend yield. With interest rates tipped to fall to 2 per cent in 2015, dividend stocks will likely play a key role in driving the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) higher. According to Morningstar estimates, Coca-Cola Amatil will yield 4.4% in the 2015 financial year, franked to 75%.
