The popularity of beer is unsurpassed and companies that produce and distribute beer are on a market upswing — many beer stocks outperform earnings estimates.
Ready to tap into the market? Here’s a guide to investing in beer stocks to help you take advantage of their performance.
Overview: Beer Stocks
Historic records of beer brewed from barley dates back to 6000 BCE. Beer was made in small quantities until the Industrial Revolution made it easier to harvest and ferment barley, wheat and hops in bulk.
The Boston Beer Company (SAM) is 1 of the oldest beer breweries in the U.S. and went public in 1995. It was among the earliest small breweries to attract new investors to this niche market.
Up until 2012, big breweries such as Anheuser-Busch InBev (NYSE: BUD) and Molson Coors Beverage Company (NYSE: TAP) produced 90% of the beer in the U.S. After home brewing became legal in all 50 states, 2,058 microbreweries popped up in 2019.
The Brewer’s Association (BA) was set up in 2005 to promote and protect small and independent brewers. BA contains over 7,500 registered beer breweries, distributors and retailers. It also hosts the Great American Beer Festival every year to recognize the best new beverages entering the beer market.
Spirits with higher alcohol content like whiskey and wine have been giving beer companies a run for their money. The legalization of cannabis in the U.S. also comes into play. But despite competition, the beer market continues to grow.
Best Online Brokers for Beer Stock
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Take a look at our recommended online brokers to get started.
Features to Look for in Beer Stock
- Earnings per share: The EPS of a company can help you determine its profitability. It’s calculated by dividing the net income of a company by its total number of outstanding shares. Investing in companies with a consistent history of beating EPS estimates can be a good strategy.
- P/E ratio: You can assess whether a stock is undervalued or overpriced by its price-to-earnings (P/E) ratio. The lower the P/E ratio, the better its performance compared to its competitors.
- Yearly revenue: This is the total revenue generated by beer stocks, which can give you a fair measure of its performance in the market. Compare the revenue from previous years to get a better scale of a company’s growth and invest accordingly.
Tap into Beer Stocks
Many companies that brew beer also produce other alcoholic and non-alcoholic beverages, so beer stocks could bring you broader exposure to the food and beverage industry.
You may want to invest in these stocks to protect your portfolio during financial slumps. Start with our recommended stocks to tap into the market today.