Is it time to buy Coca-Cola Amatil Ltd, Woolworths Limited and QBE Insurance Group Ltd?

One leading broker is suggesting it's time to load up on turnaround plays such as Coca-Cola Amatil Ltd (ASX:CCL), Woolworths Limited (ASX:WOW) and QBE Insurance Group Ltd (ASX:QBE).

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The Australian Financial Review has reported today on the viewpoint of leading strategists at investment bank CitiGroup.

To begin with, Citi has pointed out that the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is currently trading on a price-to-earnings multiple that is around its highest in 20 years, and as such the broker has suggested it is correspondingly one of the most difficult times in the past two decades to find a bargain.

With the broader market looking fully priced, Citi has identified a handful of companies in the midst of turnarounds which could prove to be reasonable investment opportunities based on their "cyclically-adjusted or mid-cycle earnings".

Here are three of those ideas to consider:

Coca-Cola Amatil Ltd (ASX: CCL) – having reported a 21.3% decline in the group's core Australian beverage business, the bottler of Coke has commenced a major restructuring program to strengthen its competitive position.

Management has stated that it is aiming for no further declines in earnings per share (EPS), which would suggest that the underlying 2014 EPS figure of 49.2 cents per share represents a base level for investors to build their valuations from.

Woolworths Limited (ASX: WOW) – like Coca-Cola, Woolworths' business has been suffering from the competitive pressures and headwinds of a difficult retail environment.

These factors have seen this blue-chip's share price sold down by over 20% in the past year, with the stock currently trading around $1 above its 52-week low but presumably in Citi's eyes it still offers good value.

QBE Insurance Group Ltd (ASX: QBE) – has been a stock which has taken its shareholders on a scary roller-coaster ride. The share price is still down 36% over the past five years, despite bouncing over 30% off of its 52-week low.

QBE has faced in many ways the perfect storm of underperforming acquisitions, a low interest rate environment and declining insurance margins in recent years. Given the cyclical nature of the insurance industry and the structural changes within QBE to address company-specific issues, this stock could turn out to be a classic turnaround opportunity.

Motley Fool contributor Tim McArthur owns shares in QBE Insurance Group Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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