I bought my Coca-Cola Amatil Ltd (ASX: CCL) shares last year when they were trading at $9.39 apiece. While I've actually managed to make a small gain on my investment since that time, thousands of other Australian investors who bought in a year or so earlier haven't been so lucky.
Since hitting a high of $15.43 in March 2013, the stock has endured a crushing blow to tumble as low as $8.19 in October last year. In reality, the 47% fall was largely justifiable given the string of profit downgrades issued by the company in the space of 18 months or so, not to mention concerns regarding when or if the company would ever return to its strength.
Worth holding on
When I bought my shares, I did so knowing full well the stock could have further to fall. But I also had faith in the company's ability to right its wrongs and return to growth – a hope that was quickly fading amongst others in the market. However, while there is still a long way to go in the beverage manufacturer's recovery, management does appear to be turning this ship around.
Under the guidance of its new Managing Director Ms Alison Watkins, Coca-Cola Amatil initiated a strategic review designed to improve efficiencies and the strength of the company's brands. Up to $100 million in costs are to be removed over the next three years, marketing and product development will become primary focuses and greater investments will also be made in its once-so-promising Indonesian market, which has the potential to significantly boost earnings.
By no means do I expect this to be a quick recovery, and investors who assume it will be as simple as an overnight fix ought to look for other ways to invest their money. But I do have faith in management to rejuvenate the brand in Australia and New Zealand whilst also expanding its popularity in Indonesia, both of which should help drive far better returns in the coming years.
Earnings Update
Coca-Cola Amatil will announce its full-year profit result on Tuesday, 17 February. When the company last provided an update in December it said that pricing and profitability in the Indonesian market remained under pressure due to competition and costs, while conditions also remained "challenging" in its key Australian market.
As such, it's certainly possible the stock will take another dive tomorrow or over the next couple of weeks if the earnings report isn't up to the market's expectations. Whatever happens however, I am still a firm believer in the company's long-term potential and may view such a fall as another opportunity to top up on my current holdings.
As attractive as Coca-Cola Amatil is at these prices, there's a stock that our top analyst, Scott Phillips, believes is an even greater buy in 2015…
