Beer is hot right now and so are many beer stocks. But you shouldn’t just throw money blindly into this sector. There are some beer stocks that are doing things right, earning market share and growing revenues, and then there are the others who seem to be lost at sea.
In this post, I am going to highlight 4 beer stocks to do some research into. Two of the stocks have been doing everything right. One stock is still working on turning things around. And the final stock is trying to reverse a downtrend. And if they can reverse it, the future looks good.
So let’s take a look at these beer stocks and see which ones whet your whistle.
1. Anheuser Busch InBev (NYSE: BUD)
The All-American brewer went through some tough times a couple of years ago. Craft beer sales were spiking as consumers were tired of the same old beers they had been drinking for decades.
As any solid company does, when the market changes, you become proactive and get ahead of the trends so you can stay in business. This is what Anheuser Busch did.
They began to buy up smaller craft breweries as it was cheaper to do this rather than create their own craft beers and try to market them in a fierce marketplace. They also merged with SABMiller to bring other popular brands under their control.
This spree has paid off as the company controls 50% of the US market and 30% of the global market for beer sales.
The company expects earnings per share for 2019 to come at $4.59 compared to $3.44 for 2018. Revenues are expected to grow 1.33% to $55.35 billion.
As of this writing, there are no signs of Anheuser Busch dominance of the beer market slowing down. Of all the beer stocks, this one is easily best of the breed. The stock has also shown positive momentum with a year-to-date return of 31%.
2. Constellation Brands (NYSE: STZ)
Many consumers don’t know who Constellation Brands is but they know their beer. Their most popular beers are Corona and Modelo. In fact, Modelo is the fastest growing beer brand in the world.
But Constellation doesn’t just sell beer. They also are in the wine and spirits business too. This gives a nice defensive cushion for shareholders if consumer tastes change. The company has also recently increased its stake in Canadian Cannabis producer Canopy Growth Corporation from 9.9 percent to 38 percent with the option to increase to above 50 percent in the next three years.
When it comes to recent earnings, revenues came in at $1.97 billion, an increase of 9.64%, beating estimates. Earnings per share also beat estimates, coming in at $2.37.
While Anheuser Busch is the best of the breed, Constellation is carving out its own piece of the pie and is a force to be reckoned with in the coming years.
3. Boston Beer (NYSE: SAM)
While both Anheuser Busch and Constellation Brands are doing everything right, there is the small player known as Boston Beer. You might be familiar with them as their namesake beer is Sam Adams.
It’s been a roller coaster ride at the bourses for Boston Beer. However, the stock has managed to return 32% in the past year. The company’s efforts to improve brewery capacity will help to improve the profitability in the long-term.
In all, Boston Beer has some notable beers, which includes Samuel Adams, Angry Orchard, Twister Tea, Spiked & Sparkling, among others.
As with Anheuser Busch, the company worked on getting craft breweries under the Boston Beer label.
When they recently reported earnings, earnings per share came in at $1.84, beating estimates by $0.10. Revenues rose 9.16% to $225.22 million.
The risks are there when investing in Boston Beer. But they only own 2% of the beer market so there is the potential for a lot of growth if the company is able to straighten things out. So this stock could be a good option for an investor looking to take a chance.
4. Craft Brew Alliance (NASDAQ: BREW)
As I mentioned previously, in recent years, craft beers have exploded in popularity. Because of the difficult time these small breweries have with getting their product to market, an Oregon based business was created to help out. Introducing Craft Brew Alliance.
Three of their more popular brands include Red Hook, Widmer Brothers, Square Mile Cider Company, and Kona. Of all their offerings, the Kona brand is by far their most popular, showing up as draft options in bars and taverns throughout the world.
But the issue with Craft Brew Alliance is that the craft beer market is showing signs of slowing down. As a result, earnings have not been stellar for the company. Earnings per share came in at -$0.03, missing estimates by $0.04. Revenues were $49.33 million, missing estimates by $2.55 million. This was a decline of 4% as well.
So while Boston Beer is a risky play on beer stocks, Craft Brew Alliance is a long shot. They have a solid brand in Kona that is growing in popularity, so they have some time to figure out how to revive the business.
While it is no guarantee they can do this, if they do, investors in the company would be looking at healthy returns.
So there are 4 beer stocks to take a deeper look into. Both Anheuser Busch and Constellation are no-brainers for long term investors looking to grow their portfolio. Both have solid brands and growing businesses.
Boston Beer and Craft Brew Alliance are more risky to investors, but if you are looking to take a chance on a beer stock that isn’t the leader of the pack, either of these should fit your needs.