According to the World Health Organization, there may be more disease, societal and economic burdens attributed to alcohol in coming years “in the light of a growing population worldwide and the predicted increase in alcohol consumption in the world.”
That’s bad news … if you’re looking at your drink as half empty. But setting side effects aside for a second, population and increased consumption are great news for the companies making and selling the good stuff. In fact, lots of so-called “sin stocks” are known for being solid investments despite their potentially questionable offerings.
When it comes to booze picks specifically, several popular publicly traded names in the space are stuck in ugly downtrends and/or weak sales and earnings growth. After a three-year run-up, shares of Boston Beer Co. (SAM) have lost 27% of their value in 2015 and still look frothy relative to the company’s growth prospects. Meanwhile, Ambev (ABEV) has slid almost 20% as sales are slated to shrink by the same percentage this year.
Still, a few names in the space do boast the one-two punch of momentum and earnings growth, which could make them great stocks to buy heading into the holidays and 2016. Take a look:
Best Boozy Stocks: Compania Cervecerias Unidas (CCU)
Compania Cervecerias Unidas (CCU) isn’t an on-the-rocks alcohol pick, as the company also produces soft drinks, water and nectar. But it indeed brews beer and produces wine … and it does so in high-growth international markets like Uruguay, Paraguay and Bolivia.
In Bolivia, for instance, average consumption per capita grew by 46% from the 2003-2005 period to the 2008-2010 period.
After several years of stock and earnings declines, CCU stock is finally posting a recovery. The stock is displaying impressive relative strength, with 28% year-to-date gains that leave shares well above short- and long-term moving averages.
Meanwhile, the earnings declines have nearly bottomed, with more than 11% long-term growth estimated for the company.
Best Boozy Stocks: Constellation Brands (STZ)
The next strong booze stock is sitting near all-time highs — momentum that should continue heading into the new year. Constellation Brands (STZ) is an international beverage alcohol company, which sells spirits like Svedka, beer like Modelo and Corona and a variety of wines.
Put another way, when it comes to picking your poison, Constellation has a wide-ranging selection.
After averaging annual earnings growth north of 25%, Constellation Brands is slated to expand by another 14% per year over the next half decade.
And there’s reason to believe Constellation will deliver: The company’s beaten expectations for a year straight and is doing anything but sitting still — as evidenced by this week’s move to snatch up California brewer Ballast Point Brewing & Spirits for $1 billion.
With a solid historical return on equity and assets, there’s good reason to think that investment will pay off and send STZ to even higher highs.
Best Boozy Stocks: Brown-Forman (BF.B)
You might not have heard of Brown-Forman (BF.B), but you’ve likely heard of Jack Daniels and Southern Comfort. Brown-Forman is the name behind those names.
The stock’s recent run is less surprising if you consider the fact that over half of the alcohol consumed worldwide was in the form of spirits last year. Like STZ, shares of BF are sitting near all-time highs as well, thanks in part to a 21% run in 2015.
Also like STZ, Brown-Forman boasts strong fundamentals and growth prospects. The company’s 1.6% dividend yield is a nice mixer for its estimated long-term earnings growth, which is just shy of double digits. Meanwhile, the company’s profit margin of 22% and operating margin of 32% are signs of a solid business model.
Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Forbes, Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.