The global beverage industry can be characterized as being massive and mature. It’s valued at $1.81 trillion in 2022. By comparison, the entire U.S. economy is valued at somewhere around $25 trillion based on GDP. That isn’t an apples-to-apples comparison, but it does get the point home that the beverage industry is indeed massive.
It’s also a mature industry that has developed over many decades and can trace its roots back to previous centuries. That implies that the industry is mature and growth should logically be somewhat slower. That’s true: The industry is marked by a compound annual growth rate of 4%. But it’s steady. That’s also a positive in a period when it’s difficult to depend on much. But that safety is a good part of the argument in favor of beverage stocks.
With that in mind, here are the best beverage stocks to consider today.
|MNST||Monster Beverage Corp||$96.12|
|PRMW||Primo Water Company||$13.16|
|KDP||Keurig Dr Pepper||$36.40|
Monster Beverage Corp (MNST)
Monster Beverage Corp (NASDAQ:MNST) stock is underpinned by multiple energy drink brands, most famously the eponymous Monster brand. But it also relies on several other brands, including NOS and Full Throttle.
The good news is that it looks like the high-inflation environment has not slowed the company down at all. In the first quarter of 2022, the company reached a record $1.52 billion in revenue. That was 22.1% higher than a year earlier when economic worries were substantially lower. The results certainly point to the idea that consumers are going to continue to buy the company’s energy drinks in any environment.
Those strong results were propped up primarily by Monster, Reign and True North, a seltzer-based energy drink. Those brands collectively accounted for $1.4 billion of the $1.52 billion in sales during the quarter.
MNST stock has plenty of upside with the only real knock being net income figures, which lagged as input costs dinged the bottom line.
Brown-Forman (NYSE:BF.B) is a company and a stock that you may have never heard of. But it is the parent firm of several liquor brands that are household names, including Jack Daniels, Woodford Reserve, Finlandia and Chambord among others.
And the company’s recent strong performance and its Jack Daniels brand should have investors interested.
On June 8, the company released what could easily be characterized as an excellent quarter of earnings. Not only did sales increase by 23%, but net income also increased by an even stronger 26%. That is an excellent result in the best of times. When a company can increase revenues and do so efficiently it is a strong signal. When it can do so in an operating environment marked by damaged supply chains and rising input costs, even better.
There’s reason to believe things could improve further: The company is partnering with Coca-Cola (NYSE:KO) to bring a canned version of Jack and Coke to shelves in Mexico later this year. Canned cocktails are a rapidly growing subsector of the beverages industry and it’s easy to expect canned Jack and Coke could be a big hit.
Any investor looking to mitigate risk has likely considered Coca-Cola stock recently. It’s a popular stock thanks to its relatively stable performance. In short, it can withstand volatility much better than the overall market. There are several metrics to back this notion.
For one, while the S&P 500 remains down more than 18% in 2022, KO stock is up by more than 5%. Safe money has delivered itself from risk-off equities and into a select few stalwarts of safety, including Coca-Cola.
It is one of the surest bets for investors seeking a buffer against volatility. So, its 0.56 beta based on monthly averages over the past 5 years is certain to continue to attract investor capital throughout 2022. There’s little doubt that this trend will continue through July and the summer as the Federal Reserve continues to hike interest rates.
Primo Water Company (PRMW)
Primo Water Company (NYSE:PRMW) stock is a relatively unknown name. But that relative anonymity comes with plenty of upside — 44% — based on target prices. By the way, the analysts covering the firm almost unanimously rate it a buy.
The company itself deals with coffee and water. It sells bottled water, water filtration and coffee in North America, Europe and Israel.
It’s an interesting stock because it represents a unique mix of characteristics investors seek. On the one hand, it’s a growth stock: Revenues grew 10% in the first quarter of this year but the company still reported a net loss of $6.7 million.
But on the other hand, PRMW stock comes with a dividend, which, though it yields a modest 2%, has not been reduced since 2012.
Celsius (NASDAQ:CELH) stock represents one of the more interesting and novel areas of the beverage industry: Calorie-burning beverages.
There’s a lot to like. Like Primo Water, Celsius has plenty of upside based on target prices — 30% — and near-unanimous analyst backing.
It is also backed by massive growth. In fact, the $133.4 million of revenue it recorded in the first quarter was 167% greater than a year earlier. On top of that, it’s profitable. A year ago the firm reported a modest net income of $585,000. This year that figure jumped to $6.7 million.
Celsius products are branded to appeal to fitness and health-minded consumers and it seems to be working. Anecdotally speaking, it is a brand I’ve personally seen occupying a greater share of shelf space in supermarkets.
Keurig Dr Pepper (KDP)
A year ago Barron’s ran an article on why Keurig Dr Pepper (NYSE:KDP) stock was beating Coca-Cola and Pepsi (NASDAQ:PEP) while the latter two stocks were flat. The answer was that consumers prefer its flavors and low-calorie sodas to those of its competitors.
That’s good news for the company overall.
The other good news is that KDP stock has performed similarly to KO stock throughout 2022. Both have significantly outperformed the broader markets though Coca-Cola has outperformed Keurig Dr Pepper.
In any case, KDP stock is also a strong bet this year. The firm’s most recent earnings results were strong. Strong enough, in fact, that the company raised guidance for the remainder of 2022.
Ambev SA (ABEV)
Investing in Ambev SA (NYSE:ABEV) stock makes a lot of sense for investors who want a penny stock backed by household brand names. Ambev SA features Budweiser, Micheolb, Busch, Stella Artois and Hoegaarden for starters. It also has brands within its craft beer segment. On top of that, the firm also has brands in alcoholic seltzers, kombucha and other canned alcohols.
And it currently trades for $2.65 per share with another dollar of upside according to analysts.
The reasons to consider investing in ABEV stock include revenues that grew 11.1% in the most recent quarter on volumes that increased by only 2.8%. The company saw its EBITDA rise by 7.4% and double-digit growth top and bottom line in most of its markets.
On the date of publication, Alex Sirois 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.