Consumer Products

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

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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