Coca-Cola Amatil Ltd (ASX: CCL) shares have staged a significant comeback from their 52-week low point of $8.19 which was reached on 13 October 2014. With the stock gaining a further 1% today to $10.90, the stock has now rebounded around 33% from its lows.
Investors who backed the beverage maker after the free-fall from over $11.40 (it touched its 52-week high just before its dramatic fall) to $9 back in mid-April 2014 are certainly sitting pretty given the share price has nearly regained all of its lost ground.
While the last six months have obviously been a great period to own shares in Coca-Cola Amatil the question now for investors is does the future also look bright?
Here are three reasons why the stock could continue to do well.
New management – Ms Alison Watkins who was previously running grain logistics business GrainCorp has been in the Managing Director's seat at Coca-Cola Amatil now for just over 12 months. Today's announcement that a new Chief Financial Officer (CFO), Martyn Roberts, who was previously finance director at Woolworths Limited (ASX: WOW) has been installed further strengthens the management team. Given Woolworths is a key customer for Coca-Cola Amatil, Roberts' experience should be highly beneficial to the group.
The worst has passed – Coca-Cola Amatil has endured a difficult trading environment in 2014 with the Australian beverage division recording a 21.3% decline in earnings. To management's credit, it has been quick to restructure the group's activities and improve the competitive position which should hopefully lead to an improved performance in 2015. These efficiency and operating improvements have included a rationalisation of stock keeping units (SKUs), with a 250 SKU reduction during 2014.
Dividend – For the current 2015 year, management has provided guidance that it is aiming for a return to mid-single digit earnings per share growth. This scenario should make last year's partially franked total dividend of 42 cents per share at least maintainable and implies a yield of 4% for the stock at current levels.
