The Motley Fool

Take advantage of poor earnings news to snap up these 3 companies

The share prices of a number of companies have taken a battering over the last few weeks as earnings reports have failed to meet the expectations of investors and analysts. Even the record-breaking profit realised by Commonwealth Bank (ASX: CBA) wasn’t enough to woo investors, who traded the company down due to the bank’s decision to not issue a special dividend.

Similarly, reports released by mining heavyweights BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) did little to increase confidence in the mining sector, with profits for both companies way down and their outlook on commodities in the near future not so optimistic either.

However, while it is hardly ideal when companies fail to meet short-term expectations – or when they announce that they could be competing against tough market conditions over the next six months – it does give investors an opportunity to pick companies up at discounted prices.

Coca-Cola Amatil (ASX: CCA) is one such company that could be an excellent addition to your portfolio. Its shares took a hammering on Tuesday, falling 5.5% after it announced that its full-year profit could be 4% lower than last year’s result. Coca-Cola Amatil cited tough trading conditions in the supermarkets as well as aggressive discounting by its main competitor Schweppes for its outlook.

Coca-Cola Amatil is the manufacturer and distributor of some of the strongest brands in the world, and the effects are highly unlikely to extend into the medium-to-long terms.Currently priced at $12.37 per share, Coca-Cola Amatil offers a 4.5% dividend yield and growth potential, as its performance in Indonesia continues to impress.

QBE Insurance (ASX: QBE) is another blue chip that disappointed investors on Tuesday, reporting a fall in net profit after tax (NPAT) by 37% to US$477 million. Whilst investment income in the near future looks weak, the new management team will continue to cut costs and improve operating metrics, which will boost profitability in the future.

As one of the world’s leading insurance groups, it is currently trading at a reasonable price and offers a 3% dividend yield. Like Coca-Cola Amatil, this is a company that could be entrusted with a position in your portfolio for the long-term.

ResMed (ASX: RMD) bucked the trend set by Coca-Cola and QBE Insurance, with the company reporting a 20.5% increase in net profit for the 12 months ending June 30, including an 11% increase in revenue for the fourth quarter. ResMed is a developer and manufacturer of products for the treatment of respiratory disorders and maintains a strong and focused management team. As it increases its market share across the globe, expect this company’s profits to continue to climb.

If you don’t think these companies are quite what your portfolio needs, then perhaps you might be interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here’s the best part: we think there’s one ASX stock that’s uniquely positioned to profit immensely from this explosive new industry… taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more