Companies and Brands

Why Booze, Beer and Wine Stocks Could Be the Best Trades for the Rest of 2022

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If there is one item that never goes out of favor in the United States and around the world, it is alcoholic beverages. While not everyone likes to partake, ask yourself how many close friends and relatives you know that don’t take a nip every now and then. With the NFL and college football seasons right around the corner, you can bet that the top companies in the industry are ready for the demand to increase, and increase in a big way.

While COVID-19 infections have risen due to the variant despite massive inoculations, the reality is that sporting venues that were all but shut down last year will be open for games this year. There may be some restrictions, like proof of vaccinations or negative tests and masks, but the fans look to be back in the stands and partying before and after at tailgates and at homes around the country.
Jefferies noted in a new report that some of the top beer stocks have sold off sharply, which got us looking at some of the other spirits, beer and wine stocks, and they all have been hammered. Given a very rich market, and the possibility of a seasonal correction over the next couple of months, it makes sense to consider some of the top booze, beer and wine plays.

We found four, including three that are favored at Jefferies, that are solid ideas for growth investors looking to shift away from momentum and meme plays. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Anheuser Busch

This company sells the most beer in the world, and it is a great idea for long-term growth investors. Anheuser Busch Inbev S.A./N.V. (NYSE: BUD) engages in the production, distribution and sale of alcoholic beverages and soft drinks worldwide. It offers a portfolio of approximately 500 beer brands, including Budweiser, Corona, Stella Artois, Beck’s, Hoegaarden, Leffe and Michelob Ultra. Other brands include Aguila, Antarctica, Bud Light, Brahma, Cass, Castle, Castle Lite, Cristal, Harbin, Jupiler, Modelo Especial, Quilmes, Victoria, Sedrin and Skol.

The stock was hit hard in July after a so-so second-quarter earnings report. Given the strong brand strength, with Bud light leading the way, this stock has rebounded from pullbacks comparable to the one in place now, and the risk-reward at the current trading level is outstanding.

Stockholders receive just a 0.73% dividend. Jefferies has a giant $89 price target on the shares, and the consensus target is $78.22. The last Anheuser-Busch InBev stock trade for Thursday was reported at $60.56 per share.


While perhaps a less well-known name, this company is a big player in the adult beverage world. Brown-Forman Corp. (NYSE: BF-B) manufactures, distills, bottles, imports, exports, markets and sells various alcoholic beverages. It provides spirits, wines, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons and liqueurs.

The company offers its products primarily under the Jack Daniel’s, Woodford Reserve, Old Forester, GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, Coopers’ Craft, el Jimador, Herradura, New Mix, Pepe Lopez, Antiguo, Korbel Champagne, Sonoma-Cutrer, and Finlandia brands. It is also involved in the sale of used barrels, bulk whiskey and wine, as well as the provision of contract bottling services.

Brown-Forman serves retail customers and consumers through distributors or state governments, as well as to retailers, wholesalers and provincial governments directly. It has operations in the United States, the United Kingdom, Germany, Australia, Mexico, and elsewhere.

Investors in Brown-Forman stock receive a 1.03% dividend. Citigroup’s $81 price target is well above the consensus target of $71.39. The shares closed on Thursday at $69.68 apiece.

Constellation Brands

If any company has products that stay in style, it is this one, which only has 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wide-ranging portfolio spans wine, spirits and imported beer.

The company is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.

Constellation Brands made a gigantic $3.8 billion investment in cannabis company Canopy Growth in 2018 to increase its holdings in the company. The record investment reflects a world in which marijuana has become ubiquitous as its counterculture stigma fades and more states legalize use.

Investors receive a 1.63% dividend. Jefferies has set its price target on Constellation Brands stock at a lofty $300. The posted consensus target is $266.09, and shares ended Thursday’s trading at $214.35.

Molson Coors

While the return of COVID-19 infections has slowed people going out, it remains much more robust than a year ago. Molson Coors Beverage Co. (NYSE: TAP) is one of the world’s largest brewers (more than a 3% global share) with core brands Coors Light, Miller Lite, Carling, Molson Canadian and Staropramen.

Molson and Coors merged in February 2005 and added StarBev in 2012, and it serves markets including the United States, Canada, Eastern Europe and the United Kingdom and Ireland, with exposure to other markets through its Molson Coors International division. It acquired the remainder (58%) of the U.S. joint venture (MillerCoors) in mid-October 2016.

Back in the spring, the company provided a fiscal 2021 financial outlook that implies a significant step up in marketing spending that should help support sales growth. With summer almost over, but fall and football ramping up, things could look much brighter by the end of the year.

The $68 Jefferies price target compares with the $57.00 consensus figure. Thursday’s last trade hit the tape at $47.17 a share.

While so-called sin stocks don’t appeal to all investors, the fact is that these companies are solid plays for investors concerned about lofty valuations and the potential for some market volatility going forward. The best news for investors that belly up to the bar is the fact they are very cheap on a historical basis and are offering some incredible entry points.

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