Could Coca-Cola Amatil Ltd be the Comeback King of 2015?

The financial year (FY) just ended was a very disappointing period for investors in Coca-Cola Amatil Ltd (ASX: CCL). For the year ending 30 June 2014, the beverage maker’s share price fell just over 25%; in contrast the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) gained 12%.

What’s more, as we near the conclusion of the first month of the current financial year things aren’t looking any better. CCA’s share price is down a further 2.4%, meanwhile the index continues to rally having gained 3.3% so far this month!

Much of the fall in CCA’s share price can be attributable to the price war being waged between the major supermarket chains owned by Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES), and also competitive pricing pressure being applied by CCA’s biggest rival Schweppes.

While some of these pressures are largely outside of CCA’s control, the company is still busy refining its business model to improve its future, for example through the revival of its beer business. Ultimately it will take time for CCA to adjust to industry changes, however there is one BIG reason why CCA could be the ‘Comeback King’ of FY 2015 – valuation.

According to consensus data provided by Morningstar, CCA is forecast to earn 63.7 cents per share (cps) in FY 2015 and pay a dividend totalling 51 cps. Based on these forecasts, the stock is trading on a price-to-earnings ratio of 14.5 and a partly franked dividend yield of 5.5%.

Highlighting the appeal of CCA on valuation grounds is the comparison with the average PE and yield of the S&P/ASX100 Industrials (ex-Financials) of 17.6x and 4.4% respectively. It also suggests there could be scope for a re-rating of this quality blue-chip stock in the coming year.

Coca-Cola Amatil looks appealing but there is one more stock you really ought to know

The opportunity presented by CCA's beaten-down share price certainly looks appealing, however before you do anything make sure you also consider this Top Stock. The Motley Fool has issued a firm "BUY" rating on this small but ultra promising ASX company... and you can get the name and code FREE right now. Click here for your free copy of "The Motley Fool's Top Stock for 2014."

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

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