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Believe It Or Not, Morgan Stanley Says Buying Beer Is A Smart Investment

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Believe It Or Not, Morgan Stanley Says Buying Beer Is A Smart Investment
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Putting money into beer might be a smart thing to do according to a new report by Morgan Stanley.

Morgan Stanley analysts believe that the overall American consumer environment is improving. Unemployment rates are at multi-year lows, consumer confidence is at multi-year highs, gas prices are low and a slew of local laws have been passed recently to raise minimum wage in key markets across the United States.

A Spirited Recovery?

Analysts looked at the potential for a recovery in the alcoholic beverage sector in 2015. The report indicates that early indications of such a recovery are already coming in. Morgan Stanley sources within the bar/restaurant industry have indicated that alcohol sales have picked up recently. This anecdotal evidence was seemingly confirmed by the December 3 Brown-Forman Corporation (NYSE: BFB) conference call.

Other Beneficiaries Of A Macro Recovery

The report was very bullish on the non-alcoholic beverage sector as well. The Coca-Cola Co (NYSE: KO) has been a market leader in pricing increases, and Red Bull is looking to do the same in the energy drink group in 2015. Morgan Stanley sees improved top-line growth in beverage companies from these pricing hikes.

Top Picks

Analysts selected Constellation Brands, Inc. (NYSE: STZ) as the top alcohol play, citing its high exposure to premium beer in the United States. When it comes to non-alcoholic beverages, Monster Beverage Corp (NASDAQ: MNST) is Morgan Stanley’s top pick because of its high exposure to the U.S. market, particularly gas stations and convenience stores.

Image credit: Wagner T. Cassimiro "Ara.. Flickr

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