Even big corporations have to take a step back and rethink how their business needs to change. Old ways worked in the past, but smart companies adjust to new conditions.
Currently, Coca-Cola Amatil Ltd (ASX: CCL) has recently started restructuring to cut costs, improve margins and reduce waste. There's also Suncorp Group Ltd (ASX: SUN), which is planning to achieve up to $265 million in annual savings by 2016 through a business simplification program.
Investors can benefit because the improvements and savings fall to the bottom line, potentially raising earnings and driving a stock up.
Credit Suisse has put together a list of ASX companies that will be restructuring over the next several years. The international investment bank is forecasting some of these companies could outperform in 2015 after performing poorly recently.
On top of that, the share prices of some of these stocks don't seem to have the potential business improvement priced in yet.
Investors could potentially cherry-pick the best ones while still at a discount.
Here are two of the stocks Credit Suisse highlighted that might be able to give your returns a boost in 2015.
Well-known as a leading business bank, National Australia Bank Ltd (ASX: NAB) has lagged the other big four banks in recent years due to its underperforming UK businesses. Newly appointed CEO Andrew Thorburn has decided to move forward with plans to sell off those assets. Disposing of them may take some time.
The bank's stock hasn't reacted dramatically to these developments and has moved similarly to the other big four banks. NAB trades at 14 times earnings, toward the high end of the past PE range and is yielding a very attractive 6.1% fully franked.
BHP Billiton Limited (ASX: BHP) is entangled in the falling out of three major commodity markets- iron ore, oil and now copper. Since last August, the stock has slid from around $40 a share to $27, or about 32% down.
However, the Big Australian has plans to spin off its less profitable mineral divisions into a proposed separately listed company called South32. Remaining would be its "four pillars"core businesses of iron ore, coal, copper and petroleum. Unfortunately, none of those commodities are faring very well right now. The miner also plans other restructuring to cut costs and potentially conduct a capital return to shareholders.
Despite the spin-off and restructuring plans being in the news, the weak commodities story is front and centre in investors' eyes and the stock is staying down. I myself would hold off on any big move into the stock with oil still heading south. Still, at some point – a very low point in the highly cyclical resources industry, it will be time to start a position. On top of that, the spin-off should cause a rerating of BHP's revenue and earnings outlook. That could be a catalyst for change. The potential is there, so watch the stock carefully.
