Shareholders of Coca-Cola Amatil Ltd (ASX: CCL) have watched helplessly as their shares have been hammered in recent years.
While the stock has traded between an $8.19 low and an $11.93 high over the last 12 months, it's currently sitting around the mid-point at $9.75 – a remarkable 37% discount to the $15.43 all-time high it recorded nearly two years ago.
But by all accounts, 2015 could be a better year for investors. Under the guidance of new managing director Ms Alison Watkins, Coca-Cola Amatil appears to be getting back on track and could be a promising long-term bet for investors. Here are three reasons why…
1. Fresh Start. Coca-Cola Amatil has issued numerous profit downgrades in recent years. In response to the issues causing those downgrades, the company initiated a strategic review in the hope of turning the ship around. While it certainly won't be an overnight fix, the company expects to reduce costs by up to $100 million annually within three years while it also said it expects no further losses beyond the 2014 financial year.
2. Growth. Coca-Cola Amatil's parent company, The Coca-Cola Company (TCCC), will invest US$500 million into CCA's key Indonesian market to bolster its competitive position there whilst also helping CCA drive expansion of production and warehousing. While TCCC would be entitled to 29.4% of the division's earnings, the deal could generate substantial returns for Australian investors and allow CCA to use more of its own funds for strengthening its position in its core Australian market.
On that note, lower interest rates and crashing oil prices could also spur more consumer spending which could be a boon for Coca-Cola Amatil.
3. Dividend Yield. In addition, Coca-Cola Amatil's shares will become increasingly attractive to investors if interest rates fall. According to Morningstar estimates, CCA will yield 4.2% in the 2015 financial year, franked to 75%, which is far better than the alternative returns from term deposits or government bonds.
