Why Coca-Cola Amatil Ltd is the opportunity of a lifetime

Very rarely are investors presented with an opportunity to buy such a quality company at such an attractive price.

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Very rarely are investors presented with an opportunity to buy such a quality company at such an attractive price. In fact, beverage manufacturing giant Coca-Cola Amatil Ltd (ASX: CCL) hasn’t traded this low since the aftermath of the Global Financial Crisis!

After soaring to a high of $15.18 in May last year, the stock is now trading at just $9.47. That’s a 38% drop in just under 13 months while, in the same amount of time, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has raced ahead more than 6%.

Of course, the downwards spiral has been far from ideal for current shareholders. Their patience has been put to the ultimate test as they have watched the stock fall on the back of a questionable outlook, changing consumer trends and declining profits, caused largely by pricing pressures from Schweppes, Woolworths Limited (ASX: WOW) and Wesfarmers Ltd’s (ASX: WES) Coles business.

However, while the market is doubting the company’s future prospects and selling the stock off en masse, I would argue that right now is the opportune time to be taking up a position – in fact, it could well be the opportunity of a lifetime. Warren Buffett once described the Coca-Cola brand as a ‘forever brand’ and stated he would never sell a single share in CCA’s parent entity, The Coca-Cola Company, and I strongly believe the same applies to Coca-Cola Amatil.

Although the stock could remain volatile for some time yet, it’s the long-term that really counts. The company’s new Managing Director, Alison Watkins, has initiated a strategic review which will see operations become more efficient and productive while almost $100 million in costs could also be removed. In addition, the company also offers a trailing 5.3% dividend (franked to 75%) which is far more attractive than returns from any term deposit.

An even better bet than Coca-Cola Amatil

I took advantage of Coca-Cola Amatil’s low price and purchased my shares at $9.39 apiece and while I’m strongly considering increasing my stake, there is another stock that I already own which I am even more bullish on.

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

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