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Here’s why Coca-Cola Amatil Ltd is a great buy for 2015

Coca-Cola Amatil Ltd (ASX: CCL) has put its shareholders through hell over the last two years with the stock, which was once a market favourite having plunged more than 42% since March 2013. By comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has risen by nearly 2%.

Indeed, the fall has been largely justified too. Sales have declined; its dominant position in the industry has come under threat; Indonesian growth has been poor; dividends have declined and there have been some significant write-downs. Pressures applied by supermarket giants Woolworths Limited (ASX: WOW) and Coles haven’t helped the company’s cause either.

Despite those factors however, now actually seems like a fantastic time to buy the stock. At $8.92, the stock is sitting just 9% above its lowest price in around five years, and could certainly be poised for a rebound.

First of all, the company has reassured investors that the worst could finally be over with its strategic review revealing a number of ways Coca-Cola Amatil can improve productivity, efficiency and the overall strength of its business.

Not only will it cut around $100 million in annual costs over the next three years, but the company will also ramp up investments in Indonesia (the market that has long been touted as Coca-Cola Amatil’s greatest growth prospect) and focus on improved marketing. It will also develop new products, such as the new Coke Life, set to hit the shelves in early 2015.

With a strong balance sheet, Coca-Cola Amatil has managed to maintain a strong dividend this year, albeit a lesser amount to that paid in FY13. Even more pleasing was news that the company was targeting “a return to mid-single digit growth in earnings per share over the next few years with no further decline expected after 2014”.

While that forecast was made in October, the company has since updated the market on its progress. Although conditions remain tough in the Australian and Indonesian markets, Coca-Cola Amatil stated that it has made “solid progress” with its initiatives, and this should translate into a better performance from the stock over the coming months and years.

An even better buy than Coca-Cola Amatil

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Motley Fool contributor Ryan Newman owns shares in Coca-Cola Amatil Ltd. You can follow Ryan on Twitter @ASXvalueinvest.

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