Shareholders of embattled beverage distributor Coca-Cola Amatil Ltd (ASX: CCL) have received a boost of confidence after financial services group UBS upgraded the stock to 'Neutral' from 'Sell' yesterday.
Since the upgrade was made, the stock has climbed a total of 25c or 2.7% to be now trading at $9.39 – its highest price in over two weeks. Unfortunately, it is still only a small victory for shareholders as the stock remains 38% in the red since May 2013.
However, after numerous analysts downgraded the stock in April after it delivered yet another profit warning for its first-half operations, the move by UBS indicates that analysts may be starting to feel that the steep declines are now behind the stock and that the upside potential now outweighs the downside investment risks.
Although the company still needs to overcome a number of business and environmental hurdles, such as a pricing war with Schweppes and pressures from Woolworths Limited (ASX: WOW) and Wesfarmers Ltd's (ASX: WES) Coles business, I believe its current price reflects an incredible opportunity for investors to buy shares on the cheap!
Coca-Cola Amatil hasn't traded at these levels since the aftermath of the global financial crisis, in which time the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has returned more than 40%. While investors have every reason to remain cautious of the stock's volatility in the near-term, it is the business' amazing long-term prospects that really count.
And, if it's any consolation (it should be), Warren Buffett bought most of his shares in Coca-Cola Amatil's parent company, The Coca-Cola Company, when it was in a bit of a rut and it has proven to have been one of his best investment decisions.
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