2 beaten-down shares with turnaround potential

Credit: Bill Dan

When investing you want to see all the shares in your portfolio flying high. But even in an incredibly bullish market, the likelihood of all your investments producing strong gains is slim.

When this happens it can be tempting for investors to cut the laggards loose and move onto something else.

But one thing that I believe is worth remembering is that it can pay to be patient. Back in 2011 the share price of Flight Centre Travel Group Ltd (ASX: FLT) spent the entire year on a consistent decline that ended up losing the company 35% of its market value.

I am sure many shareholders will have sold their shares during the decline, and it is hard to blame them for rushing to the exits. But those who held on were rewarded handsomely. From January 2012 through to the end of December 2013, Flight Centre’s share price grew by an incredible 168%. Proving that it really does pay to be patient at times.

Right now there are two quality companies which have endured a difficult 12 months, but they might just reward patient investors.

Coca-Cola Amatil Ltd (ASX: CCL)

So far this year the share price of Coca-Cola Amatil has declined by over 7%.

What attracts me most to the company is the potential growth ahead for it through its operations in Indonesia. The size of the market could quickly eclipse that of the Australian market thanks to Indonesia’s growing consumer class.

The company also pays a reasonably good dividend which has been growing steadily in the last few years. The shares currently come with a partially franked estimated yield in the region of 5.2%.

In my opinion Coca-Cola Amatil is definitely an investment worth being patient with.

Crown Resorts Ltd (ASX: CWN)

Crown Resorts is down by 17% in the last 12 months following a less than impressive half-year performance. The market didn’t react well to a 1.6% rise in net profit to $205 million and the shares were sold off.

The company is heavily investing in its future with resorts all over the world. This will take a lot of time and debt will undoubtedly rise, but the long-term benefits that these investments bring should make it more than worthwhile.

As the Australian dollar weakens I would expect inbound tourism to increase, especially with the incredible appetite for travelling that Chinese consumers are displaying.

Crown Resorts is positioned perfectly to benefit from this and I fully expect to see the share price climb much higher in the next year or two. Once again, I think this is an investment worth sitting on.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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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