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Raise a Glass to These 3 Bulletproof Booze Players

BUD, DEO and BEAM offer stability and long-term growth

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Anheuser-Busch InBev

Anheuser-Busch InBev (NYSE: BUD)Mega-brewer Anheuser-Busch InBev (NYSE:BUD) is not just a stable staples stock; it is one of the biggest and most entrenched companies in the world. BUD is a $150 billion company — larger than retail giant (NASDAQ:AMZN) or oil powerhouse BP (NYSE:BP) measured by market capitalization. BUD does about $40 billion in annual revenue across more than 130 countries, and it’s the largest brewer in the world by several metrics.

In fact, Anheuser-Busch InBev is so huge that its proposed buyout of emerging-market beer stock Grupo Modelo (PINK:GPMCF) ran into trouble earlier this year because of antitrust concerns, and BUD will have to divest the entire U.S. arm of Modelo to appease regulators. That should tell you everything you need to know about how dominant this beer stock is … and how aggressive it’s willing to get to pursue emerging-market growth. Modelo’s market share in Mexico is more than 60%, and BUD is willing to buy the whole enchilada and divest U.S. operations just to get in on this fast-growing marketplace.

BUD is flying high on projections of roughly 10% revenue growth in fiscal 2013 over last year. Thanks to this improvement coupled with optimism over the Modelo buyout, the stock is up 36% in the last year to lap the S&P 500 about three times.

But don’t think the acquisition pop will be short-lived. Longer-term, Anheuser-Busch InBev has doubled since January 2010 while the S&P is up about 40% — thanks in part to efficiencies and continued growth after the blockbuster $52 billion merger deal announced in 2008 between InBev and Anheuser-Busch.

The 1.7% dividend yield isn’t grand compared with other spirits players, and the valuation is a bit rich at a forward P/E of around 18. But cash flow is strong, and after the Modelo deal is closed, there could be a renewed effort to get cash flowing back to shareholders in the form of bigger dividends and buybacks.

Article printed from InvestorPlace Media,

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