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.
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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.
Brown-Forman
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.
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