Three of investors' favourite S&P/ASX100 (Index: ^AXTO) (ASX: XTO) stocks for income, safety and capital gains potential are Coca-Cola Amatil Ltd (ASX: CCL), Telstra Corporation Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC).
In this low interest rate environment, who can blame investors for thinking about adding these well-known companies to their long-term share portfolios?
Whilst many people understand the operations of these companies from their experiences with them day-to-day, determining if now is, or isn't, the right time to buy their shares can be difficult.
Here's a quick rundown of what you can expect from each in the coming years…
1. Coca-Cola Amatil has been through the doldrums in recent times, with profits falling by the wayside as competition from key rival Schweppes and the two supermarket giants, Coles and Woolies, took its toll on margins. But with a fresh injection of capital from its parent, The Coca-Cola Company, Australia's distributor of Coca-Cola and Beam-branded products looks to be on its way to regaining investor confidence.
2. Telstra Corporation has been one of the best-performing big dividend stocks in recent times, having doubled in value over the past five years. However, at over $6.20 per share, Telstra's valuation has become a bit stretched for investors looking to enter the stock today. Whilst recent divestments, an improved National Broadband Network deal and expansion into Asia bode well for the company long term, it's probably best left on your watchlist, for now.
3. Westpac Bank has been a powerhouse in Australian banking over the past two decades, over which time it has grown its loan book considerably. Unfortunately its blistering asset growth has been marred by falling profitability in the wake of increased competition and regulation. Moreover its current valuation appears demanding, at a time when the economy is expected to cool. Therefore investors are advised to keep Westpac on their watchlist until we're afforded a better buying opportunity.
Buy, hold or sell?
At today's prices, I think Coca-Cola Amatil appears to offer both income and capital gains potential at a good price. However at their current prices, I find it hard to envisage Westpac and Telstra outperforming the market over the next five years. Until we're offered a more compelling price, they're probably best left on the watchlist.
