This earnings season presents a unique opportunity to diversify portfolios with the best beverage stocks. As summer temperatures soar, the beverage industry is primed for a significant surge in sales, drawing the attention of consumers and investors alike.
The beverage sector includes everything from soft drinks and coffee to innovative alcoholic beverages. It is characterized by its adaptability to changing consumer preferences and promising global growth prospects.
Right now, the market is projected to expand from $3.6 trillion in 2023 to $4.4 trillion by 2028.
Thus, the global beverage industry stands out as a reliable diversification choice for long-term investments.
As health-conscious trends and sustainability shape consumer choices, the best beverage stocks emerge as a compelling option for those prioritizing stability and income amid economic uncertainty.
With that information, here are the three best beverage stocks to buy now for lucrative gains in August and beyond.
Constellation Brands (STZ)
Constellation Brands (NYSE:STZ), a top pick among the best beverage stocks, is a global producer of beer, wine and spirits. It is known for its premium brands like Corona, Modelo and Kim Crawford. The company’s beer segment is a significant revenue driver, contributing 82% of its fiscal 2024 revenue.
In early July, Constellation reported mixed results for its first quarter fiscal 2025. Revenue increased by 6% year-over-year to $2.7 billion, primarily driven by an 8% rise in beer sales.
However, the wine and spirits segment saw a 7% decline in net sales, which tempered overall growth. Adjusted EPS reached $3.57, a 17% increase from the previous year, exceeding analyst expectations.
Constellation’s commitment to premiumization and its strong consumer base position it well in the market. Notably, Modelo Especial has become the top-selling beer in the U.S. Management plans to invest $3 billion from fiscal 2025 to 2028 to expand production capacity in Mexico, including a new brewery in Veracruz.
STZ right now has a dividend yield of $1.01. Currently, the shares are trading at 18.9 times adjusted forward earnings and 4.6 times sales. Meanwhile, analysts’ 12-month median price target of $300.00 suggests a potential 18% upside from current levels.
Keurig Dr Pepper (KDP)
Next on our list of the best beverage stocks is Keurig Dr Pepper (NASDAQ:KDP), an important player in the industry. The company boasts a diverse portfolio that includes soft drinks, coffee, water, juice and mixers
Among the brands owned by the company are Dr Pepper, 7 Up, A&W Root Beer, Schweppes, RC Cola, Snapple and Sunkist, among others.
In its second quarter 2024, KDP reported a 3.5% YOY revenue increase to $3.9 billion, driven by higher pricing and a remarkable 16% growth in international sales. Adjusted EPS was 45 cents, reflecting a 7% YOY increase from the previous year.
Keurig Dr Pepper has consistently gained market share through strong brand investments and an expanded distribution strategy. The company has adapted well to changing consumer trends by focusing on innovation and expanding into high-growth categories.
Recently, Dr Pepper surpassed PepsiCo (NASDAQ:PEP) to become the second-most consumed soda in the U.S.
Moreover, strategic investments in productivity have led to significant margin expansion. Management reaffirmed its fiscal 2024 guidance, expecting mid-single-digit net sales growth and high-single-digit adjusted EPS growth.
So far in 2024, KDP stock has returned nearly 3%, backed by a 0.21% dividend yield. The shares are changing hands at relatively reasonable valuations of 17 times forward earnings and 3.1 times sales.
Finally, Wall Street analysts have set a 12-month median price forecast at $37.00, a 9% upside potential.
Monster Beverage (MNST)
Monster Beverage (NASDAQ:MNST), is a standout in the energy drink sector and ranks among the best beverage stocks. Thanks to its partnership with Coca-Cola (NYSE:KO), the company benefits from the largest distribution network in the industry, enhancing its market presence.
In the first quarter 2024, MNST reported a 12% YOY revenue increase to $1.9 billion, with international sales growing 20%.
EPS also rose by 12% to 42 cents, supported by improved margins from decreased freight-in costs and effective pricing strategies.
Recently, management announced a modified “Dutch auction” tender offer to repurchase $3 billion in shares at $53 each, aiming to enhance shareholder value.
However, the stock saw a sell-off after the preliminary results announcement on June 6, in part due to profit taking.
Despite challenges such as increased competition, potential regulatory developments and economic uncertainty, MNST is well-positioned to capitalize on the growth of the global energy drink industry.
Current projections call for a 7.9% compound annual growth rate from 2024 to 2030.
Since January, MSNT stock has declined more than 11% and is currently trading at 28.2 times forward earnings and 7.3 times sales. Analysts project an 18% upside, setting a 12-month median price target at $60.
With its upcoming earnings report scheduled for August 1, Monster Beverage stock could be volatile.
Yet, we believe MNST presents a compelling opportunity for growth-oriented investors.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
