Whoops… hitting new 52-week lows when others are coming off a great results season is not the best way to start September. Coca-Cola Amatil Ltd (ASX: CCL) has its troubles, that's for sure. The issue is whether the problems will dog the company for longer than most investors wish to wait.
There's the trick for Foolish investors, though.
When you can think further than next month or next year, then you give yourself an edge that most traders and many professional investors don't have the luxury of, that edge is patience.
You still have to look at stocks hitting new lows with a wary eye. Is there something you haven't noticed about them? It could be just a temporary situation in the short term, yet longer than others have the patience for.
Here are several reasons why I think investors should focus on the next 1 – 3 years as this story plays out. If the situation worsens, then of course, you must re-evaluate the logic of your holdings. If it gets better, though, you may be onto something before everyone else.
1) New low revisited
Coca-Cola Amatil has slipped down again to about $9 a share after a disappointing half-year result. The company said that the full year may not be as good as FY 2013. That spoils the mood, doesn't it? Not for me.
Interestingly enough, even with the confirmation of possibly another troubling six months to a year to endure, the stock hasn't plummeted. It's hit that $9 low at least three times before since April. In a way, the market is saying this might be the bottom.
2) Dividend and business restructuring
Its hefty 5.4% dividend yield partially franked may be giving it some buoyancy. However, for me it's the business restructuring that the company is doing. The cost-cutting benefits may take some time to flow through, but what they save may fall to the bottom line and boost earnings.
3) A game of two halves
The company stated in its half-year report: "While it's too early for full year guidance, we expect earnings for 2014 to be materially below 2013. Second half earnings however should exceed the first half, before significant items."
I take heart in the last part of that statement. The first half is in the history books as a dud six months, yet the next half should have better earnings. Long-term investors can take advantage of this short-term weakness and build up positions at lower prices as the situation improves.
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