6 Beer Stocks Everyone’s Been Talking About
Disclaimer: This is a website about beer… Not the Financial Times magazine.
By Mairyn Chorney on Nov. 04, 2016
Anheuser Busch InBev (NYSE: BUD)
One of the most well known brewery is Labatt Brewing Company. Originally founded in 1847 by John Labatt, Labatt was purchased by Interbrew in 1995. Fast forward to 2016, Labatt is now part of Anheuser-Busch InBev (AB InBev). Headquartered in Leuven, Belgium, AB InBev is the world’s largest brewing company. Besides Labatt 50 and Blue, other brands that are recognizable are Budweiser and Bud Light, Rolling Rock, Busch and Stella Artois just to name a few.
Should You Invest?
“…the best reason to like this stock is its market-thumping profitability. Gross profit margin ticked up to 61% of sales last year from an already-stellar 60%, which shows the power of having a truly global distribution network. Sure, investors aren’t likely to see big growth from a massive $43 billion annual sales pace. But Anheuser Busch is well positioned to generate healthy profits, cash flow, and dividend gains even if certain niches (like craft beer) and geographies (like Brazil) underperform in the coming years.” – The Motley Fool
“AB InBev saw revenues shrink 18% last year and the stock trades under $6 a share, making it too risky (volatile). For that reason, I won’t touch it.” – Cabot Investing
“BUD shares have underperformed the S&P 500 index by 5.32% from July 6, 2016 through July 25, 2016, but income investors relish the hefty 3.65% dividend yield.” – Investopedia
The giants of the beer industry have seen better days. Although they produce 20% of the world’s beer supply their growth last year has underperformed. Over the last year they have struggled to compete with the emerging American and Canadian craft beer markets but we are sure that with their $43.6 billon in revenue in 2015 they will be able to manage the storm. If you have confidence that the makers of Bud will bounce back, a 3.65% dividend could be a nice addition to your portfolio. Although analysts still say “buy”, with a 59.6% net income decline year over year maybe hold off on this one for a while.
Constellation Brands Inc. (NASDAQ: STZ)
Constellation Brands is the leading international producer and marketer of beer, wine and spirits. Their iconic imported beers include Corona Extra, Corona Light, Modelo Especial, Modelo Negra and Pacifico Cerveza Clara. Constellation is the world’s leader in premium wine, selling great brands that people know and love. These include Robert Mondavi, Kim Crawford, Meiomi, Ruffino and Jackson-Triggs. Constellation has grown to become a significant player in the beverage alcohol industry. They produce more than 100 brands and have sales in approximately 100 countries.
Should You Invest?
“Net income grew by 29.99%, year over year, to (U.S.) $1.74 per share during the most recently completed quarter. This was among the strongest growth seen by any company in this industry. ” – The Globe And Mail
“The Corona and Modelo brands helped push beer volume up 15% last quarter. Rising prices contributed even more growth so that overall its beer segment was up 19%, year over year. These operating successes have funded head-turning financial results. Constellation’s profitability is marching higher and its net income is improving at a better than 20% clip.” – The Motley Fool
“Constellation gets 91% of its revenues from the U.S. and 9% from Canada. It grew revenues 9% last year, and earnings 22% and pays a dividend of 1.0%. The stock has been in a strong uptrend for years and hit new highs last week. For growth-oriented investors who want a piece of the industry, this is the stock to focus on.” – Cabot Investing
“Beer sales, which account for 55% of Constellation’s total revenue, rose by 13.6% YTD through July 10, 2016. Much of the boost comes from the company’s purchase of the Corona and Modelo brands completed in 2013 for $4.8 billion. In order to keep up with demand, Constellation has begun construction of a $1.5 billion brewery in Mexicali, Mexico, that is expected to be completed by early 2021.” – Investopedia
Turns out the most interesting man in the world isn’t the only one raking in the dollars down in Mexico. The beverage producers over at Constellation, who bring us the best light beer to drink on a hot summer day, Corona, are also giants of the stock markets. Their performance is one of the most intense growths seen by any company in the beer and beverage industry. In a market that saw declines in almost every other major beer producer, Constellation bucked the trend and continued their rise to the top. Of all the analysts that cover Constellation Brands, the consensus was to buy.
Molson Coors Brewing Company (NYSE: TAP)
Molson Coors was formed when Molson and Coors came together back in 2005. It is now a brewing company that operates in many countries. Molson Coors offers a broad range of beers to it’s consumers. Some of these brews include Molson Canadian, Coors Light, Rickard’s, Blue Moon and Keystone Light. Molson Coors bought well-known Creemore Springs Brewery in late 2005 and Granville Island Brewery in 2009.
Should You Invest?
“Revenues fell 14% last year, while earnings shrank 9%, but projections for 2017 and beyond look good. The stock pays a dividend of 1.6% and the stock is in a long-term uptrend, though not as strong as STZ. It’s worth a look.” – Cabot Investing
“With Molson Coors’ $12 billion offer for complete ownership of MillerCoors (MillerCoors is jointly owned by Molson Coors and SAB Miller) approved by the U.S. Justice Department, Molson Coors will sell its product line to 70 nations globally. Thus, the large-scale wrangling may prove that TAP, with its $21.7 billion market capitalization, can continue its upward run” – Investopedia
“Molson Coors Canada Inc has a net profit margin of -1.15%, which, despite being negative, is in-line with the industry average. ” – The Globe And Mail
Don’t let the industry wide declines fool you, Molson Coors has had a good year.
I still remember Molson Canadian from the days of the “Joe the Canadian” commercials. Drinking one in a field when I was 18 were the best of times. Now I get to watch them outperform the S&P 500 by 18%. I’ve secretly loved Molson and Coors and their billion dollars in revenue each year since my first shotgun. Don’t tell anyone though.
Craft Brew Alliance Inc. (NASDAQ: BREW)
Craft Brew Alliance is the fifth largest craft beer brewing company in the U.S. It is composed of five beer and cider brands. These brands include Redhook Ale Brewery, Widmer Brothers Brewery, Kona Brewing Company, Omission Beer, and Square Mile Cider.
Should You Invest?
“Analysts forecast earnings per share of $0.14, up exactly $0.10 or 250.00% from 2014’s $0.04 EPS. The expected BREW’s profit could reach $2.69 million giving the stock 28.66 P/E in the case that $0.14 earnings per share is reported. After posting $0.12 EPS for the previous quarter, Craft Brew Alliance Inc’s analysts now forecast 16.67% EPS growth. The stock closed at $16.05 during the last session. It is down 90.62% since March 30, 2016 and is up trending. Out of 4 analysts covering Craft Brew Alliance, 3 rate it a “Buy”, 0 “Sell”, while 1 “Hold”.” – Money Making Articles
“BREW kicked off the year with an $8.31 close on Jan. 4, 2016, and made its way to a year-to-date (YTD) gain of 51.61% as of July 12, 2016. The purveyor of Red Hook and Kona beverages brands saw shares pop nearly 22% in June 2016 as executive severance packages were enhanced.” – Investopedia
The new kids on the beer scene have only been around for 8 years but that doesn’t mean that they aren’t crushing it in sales. They are the 9th largest beer producer in the world and are aided by their distribution partner Anheuser-Busch (who own 32.2% of the company) to keep those costs down and the beer pumping out. They just added the KCCO beer (the Chive) line to their inventory and if you know anything about fans of the Chive, you know they like to have a few cold ones from time to time. If you’re looking for a cheaper stock to add to your portfolio you should consider Craft Brew Aliance who settled in at $0.12/share at the end of last quarter.
Diageo PLC (NYSE: DEO)
Diageo is the world’s largest producer of spirits and a big producer of beer. Diageo sells products in over 180 countries and has offices in around 80. Diageo’s beverage brands include beers such as Guinness, Tusker Lager, Smithwick’s, Harp Lager, and Killkenny. Some popular liquors that Diageo produces are Smirnoff Vodka, Tanqueray, Captain Morgan Rum, Bulleit Bourbon, Crown Royal, Don Julio Tequila, Baileys and the list goes on…
Should You Invest?
“Diageo PLC is among the more effective companies in its industry at turning revenues into bottom line profit. ” – The Globe And Mail
“The firm saw revenues fall 3% last year, while earnings grew 8%. The dividend of 3.1% may be attractive but the stock is too quiet to pique my interest.” – Cabot Investing
“While Brexit briefly elicited turmoil in global equity markets, shares of British beverage company Diageo Plc showed some mettle since June 23, 2016. DEO, steadily gaining traction since June 24, 2016, bounced back from a $104.34 close, adding 9.57% in the following 18 days.” – Investopedia
Brexit, why you gotta go and ruin the British stock market?! Although Brexit caused some significant turmoil for the entire equities market, Diageo has shown that the best foam (cause Guinness… get it?) always rises to the top. Although their net income declined by close to 22% year over year, this was one of the strongest results in the industry, with almost the entire industry seeing declines in net income. Many analysts say “buy”, but be wary of the impending doom that could be Britain’s exit from the EU.
Boston Beer Company Inc. (NYSE: SAM)
In 1984, Jim Koch started The Boston Beer Company by brewing lager’s in his kitchen. Jim named his beer Samuel Adams Boston Lager and it was this beer that helped lead the American beer revolution. Now, The Boston Beer Company brews more than 60 styles of Samuel Adams beer. In 2000, Boston Beer launched a summertime favourite – Twisted Tea Brewing Company. Since the teas were such a success, in 2011 Boston Beer introduced us to Angry Orchard Hard Cider which captured the U.S by storm.
Should You Invest?
“The company grew revenues 6% last year and grew earnings 8%, but the stock’s chart looks terrible. Also, there’s no dividend.” – Cabot Investing
“Investors with a long time horizon can take advantage of what appears to be temporary struggles. Boston Beer has the brand strength, scale, and operating prowess to survive even in this cut-throat environment.” – The Motley Fool
“Boston Beer reported that revenue and profit lost some fizz in the second quarter, declining 3% and 11% respectively, analysts were expecting a bigger decline. The company had $244.8 million in sales during the period, with nearly $27 million in profits, or $2.06 per share.” – Fortune
No dividend. Twisted Teas isn’t enough to save this sinking brand. Don’t buy.
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