CBA, Coca-Cola Amatil, BHP Billiton Limited: Buy, hold, or sell?

Commonwealth Bank of Australia (ASX: CBA) has been one of the companies primarily responsible for driving the Australian stockmarket higher in recent years. In fact, its 93% jump since late 2011 has helped the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) nearly 40% higher in that time, and that’s not even taking dividends into account.

On the other hand, there have been a number of other large-cap stocks that have restricted the index from making even greater gains. The slowdown in the mining sector has seen BHP Billiton Limited (ASX: BHP) rise just 2% while Coca-Cola Amatil Ltd (ASX: CCL) has dropped nearly 24% in the same timeframe.

There is no question which of these three companies investors would prefer to have held over the last few years. However, which option should investors choose for the years to come?

Commonwealth Bank

The bank’s incredible performance over the last few years has seen it become Australia’s largest company by market capitalisation ($132.5 billion). Its profits have soared thanks to the low interest rate environment, a pick-up in the housing industry and record low bad debt charges.

The problem is, all of these benefits are almost certainly built into the share price. Priced at $81.73 and trading on a forward P/E ratio of 15.3, there is little upside for prospective investors today – particularly when earnings are expected to come under pressure in the medium term. Not even its 4.6% fully franked dividend yield make it an appealing prospect today.

BHP Billiton

Out of all of Australia’s miners (there’s certainly no shortage of them), BHP Billiton remains one of my favourites. Although it is still battling against tumbling iron ore and coal prices, it maintains heavily diversified operations, thus reducing the miner’s risk.

While BHP Billiton was one of the favourite stocks amongst analysts for new money in 2014, it has so far failed to deliver with its shares down 7% since the beginning of the year. Although I believe BHP’s long-term prospects remain attractive, I think there could well be further to fall in the short term, making the stock a hold in my opinion.

Coca-Cola Amatil

It’s been a horror run for shareholders of the beverage distributor. The stock is currently trading at $9.10 after hitting a high of $15.18 in May last year – a 40% plummet. And the truth is, the drop has been justifiable – profits have been declining, competition has been increasing and there are concerns regarding consumer health trends.

But that’s why I like this stock so much – I love buying when the rest of the market is fearful. I believe the company’s strong brands, new products and excellent management team will be able to guide the stock much higher over the long term. While I bought the stock at $9.39, I am strongly considering adding to my stake.

An even better investment opportunity…

Out of the three companies mentioned, I am clearly most bullish on Coca-Cola Amatil. Although the short term could be volatile, it’s the long term that really counts and that’s where I plan on building my wealth.

However, there is another stock I am even more bullish on. And the good news is, the market hasn’t caught onto its incredible potential yet!

This little known ASX company has already delivered eight consecutive years of profit and dividend growth... but with even more growth ahead, the shares are still a firm "BUY" today! Discover The Motley Fool's #1 dividend pick in our newly updated report. Simply click here for your FREE copy right now.

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

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