With the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) hovering within an arm's reach of a new seven-year high, many investors assume that Australian equities have become too expensive, and that there is no value to be found – particularly at the big end of town.
While that is the case for many of Australia's blue-chip stocks; there are still a number trading at reasonable prices which investors should seriously consider buying today.
One blue-chip offering plenty of taste
It's been a long couple of years for shareholders of Australia's largest non-alcoholic beverage manufacturer, but Coca-Cola Amatil Ltd (ASX: CCL) certainly appears to have turned its misfortunes around. After having nearly halved in value between March 2013 and October 2014 to hit a low of $8.19, the stock has rallied more than 33% to currently be trading at $10.88 – heavily outpacing the benchmark index over that time.
Following numerous profit downgrades, which came largely as a result of falling revenues and sales volumes, the company undertook a strategic review which offered plenty of reasons for investors to get excited. While it identified $100 million in annual cost reductions, it will also spend more on marketing and product development, which should strengthen the brand's image over time, enhancing its competitive advantage over other market players.
Meanwhile, US$500 million will be injected into the company's struggling Indonesian division, thanks to its parent entity The Coca-Cola Co., which could generate significant growth over the long-term.
Get your portfolio's returns bubbling
While Coca-Cola Amatil could generate significant capital gains for investors who buy the shares today, investors will also be treated to a strong flow of dividends.
Despite its struggles in recent years, Coca-Cola Amatil has maintained a strong balance sheet which has enabled it to maintain a reasonable dividend, even though it has been lowered recently. At its current price of $10.88, the stock is expected to yield 3.9% (franked to 75%) this financial year and with earnings per share tipped to return to growth next year, so too should its dividend.
