The recent misfortunes of blue chips, Coca-Cola Amatil Ltd (ASX: CCL) ('CCA') and Woolworths Limited (ASX: WOW), have been well-documented in the financial media.
And rightly so…
Over the past five years, their share prices have significantly underperformed the S&P/ASX 200 (Index: AXJO) (ASX: XJO).
Indeed, whilst the ASX 200 has risen 25%, CCA and Woolworths are 3% and 21% lower, respectively.
Boasting strong brands and market share, now could be the ideal time to take a second look at both companies.
Woolworths
Until recently Woolworths had an excellent track record of delivering sustainable capital gains and dividends to shareholders. However, the ongoing price war with Coles, a flailing Masters Home Improvement business and rise of international competitors, such as Aldi and Costco, has begun to take its toll on Woolworths' profits, and its share price.
As I recently showed however, Woolworths shares are now trading closer to my fair, or intrinsic, value estimate. Sure, risks persist, but it's important to note the rapidly growing Aldi franchise has already been in Australia for 10 years so its success should come as little surprise. Whilst there is nothing wrong in avoiding companies who face headwinds, investors could probably do worse than keep a close eye on Woolworths at these prices.
Coca-Cola Amatil
One fallout from the ongoing price war between Coles and Woolworths has been CCA's share price. The supplier of Coca-Cola and Beam branded products is also facing the prospect of a more health conscious consumer, who is now putting down the traditional soft drink varieties and picking up alternatives with less sugar and calories.
Whilst this is undoubtedly a key challenge for management, they are being proactive in taking steps towards developing healthier alternatives. Moreover, with a $US500 million cash injection from its parent, The Coca-Cola Company, there's a chance CCA will also be able to revitalise its struggling Indonesian business, over time. As Motley Fool writer, Sean O'Neill, recently wrote, CCA shares are likely trading at a healthy discount to their theoretical value.
A better dividend stock idea than Coca-Cola Amatil…
