Finding quality companies that are undervalued is a great way to build long-term wealth. The sharemarket rarely gives us such an opportunity, however recently two blue-chip companies have gone on sale: Coca Cola Amatil Limited (ASX:CCL) and QBE Insurance Limited (ASX:QBE).
1. Coca Cola Amatil Limited
Coca Cola Amatil's share price has been beaten down hard following the announcement of its FY13 full-year results, which saw earnings fall by 6.9%. The poor result was on the back of aggressive competitor pricing and retailer de-stocking. Consequently, the share price is down by 9% this year.
I believe the current headwinds faced by the company are temporary and once the competitive landscape eases, the company should return to growth. The large Indonesian market also presents a huge growth area for the company. The recent fall in the share price creates what I see as a great long-term buying opportunity. The company also trades on an attractive yield of 5%.
2. QBE Insurance Limited
QBE Insurance has been through a difficult period in recent times; consequently the share price is down by 35% over the past five years. However, I believe the company now looks attractive for investors with many analysts forecasting earnings to bounce back strongly over the coming years as underwriting revenue and margins improve.
QBE will benefit from recent its restructuring initiatives, a recovering U.S. economy and U.S. dollar and higher long-term interest rates. The U.S. business is forecast to return to profitability in FY14. At the current share price of $12.70, I think the company is undervalued.
Foolish takeaway
Both Coca Cola Amatil and QBE Insurance offer investors steady long-term share price growth and growing dividends. Luckily for investors, the market has provided investors with an opportunity to purchase both companies at a very attractive price.
