With St. Patrick’s Day just around the corner, we wanted to take a look at some of the world’s celebrated alcohol stocks. While not for everybody, it’s hard to ignore the demand that these companies experience year in and year out.
The novel coronavirus sent a severe disruption throughout the world. It completely altered the way billions of people lived their lives. It completely shifted our norms and changed the way we dine, entertain and enjoy time with friends.
For beer, wine and spirits companies, it altered business too.
With all sorts of events being cancelled, bars and restaurants closing and lockdowns in place, social gatherings were put on hold. While consumers were flocking to grocery stores to load up on their favorite drinks, the commercial end of these businesses were suffering. It was a supply chain nightmare.
Some made it out better than others. Here are seven alcohol stocks that are worth taking a look at:
- Diageo (NYSE:DEO)
- Pernod Ricard (OTCMKTS:PDRDY)
- Constellation Brands (NYSE:STZ)
- Anheuser-Busch (NYSE:BUD)
- Brown-Forman (NYSE:BF.A, NYSE:BF.B)
- LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY)
- Boston Beer Company (NYSE:SAM)
Alcohol Stocks: Diageo (DEO)
We have to start this list with Diageo. Since it’s one of the largest alcohol companies in the world, it simply can’t be ignored. More than that though, Diageo owns Guinness and Smithwick’s — two very Irish beer companies.
Around St. Patrick’s Day, it’s hard to ignore brands like this.
For Diageo though, it goes beyond a few brews. The company’s portfolio spans from beer to spirits and includes brands like Johnnie Walker, Crown Royal, Smirnoff, Ketel One, Captain Morgan, Baileys, Tanqueray and more.
That’s a heavy-hitter lineup and offers something for everyone. It hits the high end and the low end of the liquor store, and has enough diversity to attract any kind of drinker.
Diageo’s products can be found in more than 180 countries, while the stock hovers near a 52-week high and sports a market capitalization of almost $100 billion.
Obviously, Covid-19 has disrupted the company’s business. But, the company is looking to get back on track this year and accelerate into 2022, as vaccines make trips to bars and restaurants more feasible.
Pernod Ricard (PDRDY)
A lot of investors may not be as familiar with Pernod Ricard, but like Diageo, the company sports an impressive portfolio.
Specifically relating to St. Patrick’s Day, the company owns the Jameson brand. It acquired the brand in 1988 when it purchased Irish Distillers.
However, its brands don’t start and end with Jameson. The French conglomerate also owns brands like Absolut Vodka, Chivas Regal, Glenlivet and Beefeater. It also owns several wine labels, as well as JP Wiser’s, Seagram’s and Kahlua, among others.
While Pernod Ricard may not be one of the first alcohol stocks that comes to investors’ minds, it doesn’t mean it should be ignored.
Constellation Brands (STZ)
Constellation Brands also has a wide array of offerings in its portfolio.
The company is surely best known for its Corona and Modelo brands. However, its beer offerings also include Pacifico and the company’s new Corona Seltzer drink.
Constellation Brands also offers wine products, such as Kim Crawford, The Velvet Devil, Cooper & Thief and Robert Mondavi, among others. Lastly on the alcohol front, there’s High West Distillery, Belle Meade, Svedka and Casa Noble.
As cannabis continues to gain traction on a state-by-state basis, there’s hope that it will also gain traction at the federal level. While not all cannabis companies will be successful, Canopy is considered a leader in the space, and with Constellation owning such a large stake, it has a big long-term opportunity if the trajectory in cannabis plays out.
Anheuser-Busch is certainly one of the alcohol stocks investors are familiar with. With brands like Budweiser and all of its offshoots, it’s a staple in American beer.
It also includes well-known brands like Michelob, Rolling Rock, Busch and Shock Top. Further, the company had a 31.2% stake in Craft Brew Alliance. However, in September 2020, the company closed on its acquisition for the rest of the company. By doing so, it added brands like Kona, Widmer, Redhook, Cisco brands and more.
Anheuser-Busch isn’t perfect, of course. The company took a big hit in 2020 due to Covid-19.
While grocery sales of alcohol saw a nice bump, commercial sales were decimated. Think about it. Concerts, sports games, events, restaurants and bars all took a huge hit. Many still aren’t back up and running yet. That crushed the beer industry.
Not only did revenue take a haircut, but it completely disrupted the companies’ operations and logistics. Anheuser-Busch took it hard. On the plus side, the rebound in the coming years should be a nice boost to the top and bottom line.
Brown-Forman (BF.A, BF.B)
Brown-Forman is probably best known for its flagship Jack Daniels brand. That alone commands this stock some clout. The company isn’t the biggest fish in the pond, but it’s not one to ignore either.
The company also has other well-known brands too, including Woodford Reserve and Old Forester. It also has tequila brands like Herradura and El Jimador, among a few other spirits.
Like Anheuser and others, Brown-Forman has been impacted by Covid-19, but to a differing degree. The company is almost done with its fiscal 2021 year, with just one quarter left to go. Consensus expectations call for 1.6% revenue growth.
While commercial sales have taken a hit, the consumer side of the business has done quite well. While commercial sales have taken a hit, the consumer side of the business has done quite well.
Looking ahead, analysts expect to see 7.4% sales growth and 10.6% earnings growth. Not bad, particularly for a stock that’s been trading sideways and is down 9.5% over the past six months.
LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY)
For the investors who want to pop a nice bottle of bubbly, they shouldn’t forget about LVMH. Known for its high-end portfolio of various brands, the company is no stranger to alcohol.
How about these heavy hitters: Dom Perignon, Moet & Chandon, Hennessy and Veuve Clicquot.
Of course, there are other well-known brands in the lineup too. Ardbeg and Glenmorangie produce great whiskies, while LVMH has a handful of vineyards and wineries producing high-quality bottles.
The company is the epitome of luxury, with its other brands including Louis Vuitton, Fendi, Dior, Bvlgari, Tag Heuer, and after its latest acquisition, Tiffany & Co.
LVMH has its hands in fashion, perfumes and alcohol, among other businesses. It’s a true conglomerate that continues to grow and hold its value. As the global economy looks to recovery, I expect this company will do very well. With its stock at all-time highs, the market must think so too. Plus, the wealthy didn’t suffer the pinch that many others did during Covid-19, so business did just fine.
Boston Beer Company (SAM)
By far one of the hottest alcohol stocks has been Boston Beer Company. With its $13.57 billion market cap, it’s not that big compared to the conglomerates. However, the stock’s performance speaks for itself.
Up 27% in the past six months is pretty good, but it pales in comparison to the stock’s one-year return of 261%.
Helping guide the stock higher is Boston Beer’s strong growth. Analysts expect 40.6% revenue growth in 2021, followed by 24.1% growth in 2022. On the earnings front, those growth estimates swell to 49.7% and 26.5%, respectively.
I wouldn’t say Boston Beer stock is necessarily cheap. However, it’s the one with robust momentum at the moment, and it’s got solid growth to boot. Perhaps its lower market cap and strong growth will make it an M&A target for some of the larger conglomerates struggling with growth.
Either way, Boston Beer is one to know.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.