Alcoholic beverage company, Anheuser-Busch InBev (NYSE:BUD), parrent company of Budweiser and Bud Light among others, was at the center of heated debate and boycotts. However, some investors might find value in BUD stock now. It’s not our number-one pick of all time, but it gets a “B” grade and may be worthy of a small share position.
Alcohol stocks are sometimes called sin stocks because even an economic recession probably won’t stop people from consuming Anheuser-Busch’s products. A recent controversy may hae negatively affected its sales. So, let’s examine both sides of the issue and determine if there are decent growth prospects for BUD stock.
The Controversy Surrounding AB InBev
Here’s what landed Anheuser-Busch in the headlines. Second-quarter 2023 U.S. sales of Bud Light fell 10.5% year over year in the wake of a promotional partnership with transgender influencer Dylan Mulvaney. Reportedly, some conservative consumers had boycotted Bud Light beer.
Overall, BUD stock has been a poor performer in 2023 so far. There may be a decent value and passive income play here. Anheuser-Busch’s trailing 12-month price-to-earnings ratio of 17.61x isn’t unreasonably high. The company pays a forward annual dividend yield of 1.54%.
Besides, Bud Light certainly isn’t Anheuser-Busch’s only important product. Anheuser-Busch is focusing strongly on low-calorie Michelob Ultra, elevating it to “global brand” status. Controversies come and go, and Anheuser-Busch’s sales might recover from the Bud Light backlash in the long run.
BUD Stock Gets a Big-Bank Upgrade
One analyst group envisions Anheuser-Busch as potentially turning a corner. Specifically, Bank of America analysts upgraded BUD stock from “neutral” to “buy.”
The Bank of America analysts expect Anheuser-Busch’s profit growth to improve and figure that the negative impact of the Bud Light boycott is already priced into the shares. In addition, Bank of America analyst Andrea Pistacchi declared that Anheuser-Busch’s margins “are at an inflection point.”
Also, remember Anheuser-Busch is a global brand. Therefore, investors should consider the limited impact of a U.S. boycott.
Thus, Anheuser-Busch may make up for U.S. sales losses through strong sales in Latin America. On that topic, Pistacchi feels that Anheuser-Busch is “in a good position to leverage its strong market positions, particularly in Latin America, into better profit growth going forward.”
BUD Stock: Not to Everyone’s Taste
For several reasons, some investors won’t add to Anheuser-Busch to their watch lists in 2023. That’s a personal decision, and people will have different perspectives about Anheuser-Busch.
However, some investors won’t mind giving sin stocks a try. In addition, you might expect the controversy surrounding Anheuser-Busch to fade. Plus, Anheuser-Busch may be able to develop its sales in Latin America and improve its profit margins.
For those reasons, BUD stock gets a “B” grade. It’s certainly not our most confident pick of the year. Yet, for some investors, it may be appropriate for a moderately sized share position.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
