Buying high-quality companies when they are trading at down-and-out prices and holding them for the long-term is perhaps the greatest way an investor can grow their wealth exponentially. Indeed, it is the method that Warren Buffett employed to turn an initial $10,000 into more than US$62 billion today.
By holding companies over the long-term, investors can not only take advantage of their eventual return to strength, but also any dividends paid along the way. Although the S&P/ASX 200 Index (INDEXASX: XJO) is sitting at its highest point since the Global Financial Crisis, there are still a number of high-quality corporations trading at run-down prices which are well worth your attention today.
Coca-Cola Amatil Ltd (ASX: CCL) is a perfect example. The stock has tumbled more than 40% since March 2013 due to a retail-pricing war with Schweppes, a struggling SPC Ardmona business, a strong Aussie dollar and inflationary pressures in Indonesia. While the short-term pundits are probably right to avoid this one, the long-term investors should be swooping in to stock up on a high-quality corporation trading at an unbelievable price. It is expected to pay a total dividend of 43 cents per share this financial year, putting it on a yield of 4.7%.
Cover-More Group Limited (ASX: CVO) is another company that has been out of the market's favour, although it looks to be making a recovery now (don't worry – it's still well below its 52-week high price)! The group is Australia's largest travel insurance company and featured as my Top Stock Pick for August for a number of reasons. Aside from its discounted price, it also boasts strong growth prospects while it is expected that a high level of international travel will be sustained in the future.
Following last week's mass sell-off, BHP Billiton Limited (ASX: BHP) is also worthy of a position on this list. The miner's shares dropped after it failed to announce a much-anticipated share buyback program which would have been aimed at improving shareholder returns. While it would have been nice to see investors rewarded for their patience, last week's drop gives the opportunistic investor an opportunity to pick up shares at a more compelling price of $37.80.
An opportunity you won't want to miss…
Opportunistic investing doesn't mean you have to wait for shares to fall in price before you buy. Other times, it is simply about finding high-quality companies trading at reasonable prices that are set to deliver market-beating returns.
