Should you buy Coca-Cola Amatil Ltd in 2015?

Although there remains an element of uncertainty, things are certainly looking more positive for shareholders of Coca-Cola Amatil Ltd (ASX: CCL) in 2015. Following on from a string of disasters over the last two years, conditions could finally begin to improve in 2015 for those who have remained loyal to Australia’s largest beverage manufacturer.

Since March 2013, Coca-Cola Amatil has faced a barrage of challenges for its throne. Sales have fallen due to a price war with Schweppes while pricing pressures from Woolworths Limited (ASX: WOW) and Coles, Indonesian wage inflation, a strong Aussie dollar and changing consumer health trends have all resulted in numerous profit warnings.

The result?

The shares have fallen to just $9.14, down more than 40% since peaking at $15.43 in March last year.

But things are certainly looking more positive for 2015, after the company initiated a strategic review aimed at improving efficiencies, strengthening the brand and reducing costs by up to $100 million. A keener focus will be applied to marketing and product development – with Coke Life to become the first major Coke development since Coke Zero in 2006 – while proceeds from cost savings could also contribute to lower prices.

What is also extremely encouraging is the company’s commitment to pushing harder into Indonesia. Indonesia has long been touted as Coca-Cola Amatil’s big growth prospect, but competition in the region, as well as inflationary pressures, have heavily limited earnings growth. Together with The Coca-Cola Company (NYSE: KO), the pair will invest heavily in the region to really bolster its position in the market.

Pleasingly, management declared that it expects “a return to mid single-digit growth in earnings per share over the next few years with no further decline expected after 2014.”

Should you buy?

It’s a big call but, in my opinion, Coca-Cola Amatil could well be amongst the ASX’s best stocks to buy right now. While it is by no means out of the woods yet – and there are certainly risks still facing the business – it’s not often that you get the opportunity to buy such a high quality company at such a low price. At $9.14, the stock also offers a forecast 4.6% dividend yield (franked to 75%), which should improve in the years to come as earnings strengthen once again.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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