Buying blue-chip stocks when they are out of the market's favour can be a great way for investors to bolster their portfolios. That's why so many investors are intrigued by companies like Coca-Cola Amatil Ltd (ASX: CCL), BHP Billiton Limited (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA) right now.
While all three stocks have fallen for completely different reasons in recent times, which of them are presenting as decent buys right now?
BHP Billiton
The mining giant has fallen heavily over the last month or so thanks to an unpopular capital management decision and a plummeting iron ore price. Iron ore, which is BHP's primary source of earnings, has fallen to its lowest price in more than five years at just US$79.80 a tonne.
While BHP is one of the safest ways investors can gain access to Australia's mining industry, I believe there could be more pain in store for the stock over the coming weeks or even months. As such, investors may be better off waiting on the sidelines for a more attractive point of entry.
Commonwealth Bank
They say that 'the bigger they are, the harder they fall'. That seems to hold true for Australia's largest bank, which has dropped nearly 9% since late-July. A declining Aussie dollar and a strengthening US economy have seen foreign investors withdraw their money from the local share market, leaving high-yielding stocks like Commonwealth Bank out to dry.
Sure, the stock is certainly trading at a more compelling price than it was two months ago, but it's still far too expensive for my liking. I expect earnings growth will be restricted to roughly 5% per annum over the next two or three years while the bank may even struggle to maintain its dividend payments should new capital requirements be introduced.
Coca-Cola Amatil
The beverage manufacturer's losing streak extends far beyond that of BHP or Commonwealth Bank. In fact, the stock has dropped more than 40% since peaking in March 2013 as a result of declining profits and a pricing war with Schweppes.
I believe investors are far too focused on the company's near-term outlook and ignoring its long-term prospects. With some of the strongest brand names in the world in its stable, as well as a management team dedicated to reducing costs and improving productivity, I believe Coca-Cola Amatil could deliver fantastic returns over the coming years. As such, now would be an excellent time to buy for those willing to remain patient.