10 reasons to hold your Coca-Cola Amatil Ltd shares

Coca-Cola Amatil Ltd (ASX: CCL) shareholders have had to remain patient over the last 12 months or so.

In that time, their shares have plunged from a high of $15.18 to a low of $9.00. They have since recovered marginally to sit at $9.48, which is still 38% below that high. The fall can be attributed to a fall in profits, thanks to a pricing war with rival Schweppes as well as pressures from supermarkets Woolworths Limited (ASX: WOW) and Coles, owned by Wesfarmers Ltd (ASX: WES).

Despite the recent pain, there are still plenty of reasons to like the stock. Before you contemplate selling your shares, consider these key points:

  1. Low price. Coca-Cola Amatil has not traded at these levels since 2009. Between then and now, investors would have done almost anything to have the opportunity to buy at such a low price.
  2. Wide moat. Coca-Cola Amatil’s products are amongst the world’s most popular brands. Investors like Warren Buffett refer to such competitive advantages as a “moat”, and few companies can boast a wider moat than Coca-Cola.
  3. Temporary pains. The pricing war with Schweppes will not continue forever (after all, the lower prices are also hurting Schweppes!). The problems facing the business appear to be short-term based, leaving a long runway for improvements
  4. Long-term focus. Alison Watkins has warned there will be no quick fixes for the company. Not interested in short-term targets, she will instead focus on the long-term picture to ensure the best returns for shareholders.
  5. Conservative. Watkins has also suggested long-term profit growth targets may be closer to 5%. Although this is not as ambitious as her predecessor’s targets, it is more achievable.
  6. Costs. As management restructures the business, analysts suggest the company could cut up to $100 million in costs.
  7. Alcohol business. The group re-entered the beer market late last year, which should prove very beneficial to overall earnings.
  8. Reorganised. The business will be reorganised and simplified to ensure greater productivity and efficiency.
  9. Bumper dividend. The stock offers a partially franked (75%) 5.3% dividend yield.
  10. Stronger portfolio. The company recognises it needs to strengthen itself outside of carbonated beverages which will see its position in the market strengthen.

A better bet than Coca-Cola Amatil

While Coca-Cola Amatil represents an excellent long-term bet, there is another company that is firing on all cylinders and looks set to climb much, much higher.

It is one that the Motley Fool's top analysts have tapped as their number one stock pick for 2014 and beyond. This small-cap growth stock flies under the radar, yet is rapidly growing, and has a long runway ahead. The fully franked dividend is the icing on the cake. Click here now to claim your free copy of "The Motley Fool's Top Stock for 2014."

I own the stock, and think you should take a look too.

Motley Fool contributor Ryan Newman owns shares in Coca-Cola Amatil Ltd.

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