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.
Highlighted Beer Stocks:
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.
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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.
Beer Stocks to Watch Out for This Year
Ready to check out the best beer stocks? Take a look at our watchlist for 2020.
1. Ambev SA (NYSE: ABEV)
Ambev is a beverage company that produces beer, draft beer, mixed drinks, soft drinks and juices. It was founded in 1999 and owns 32 breweries and 30 beer brands including Antarctica, Brahma, Skol, Corona and Budweiser. Ambev has a distribution network across 19 countries.
The beer stock has an EPS of $0.16 and a P/E ratio of 13.38. It has a market cap of $33 billion and has high liquidity with an average daily trade volume of 33 million. Ambev generated total revenue of $52 million in 2019.
Ambev invested $145 million in a wind farm to power Budweiser breweries in Brazil. These wind farms will generate 80 megawatts of power and save 20,000 tons of carbon dioxide emissions per year.
2. Compania Cervecerias Unidas, S.A. (NYSE: CCU)
Based in Chile, Compania Cervecerias Unidas S.A. is a beverage company that produces beer, soft drinks, bottled and mineral water, nectars and wine. It produces and distributes beer such as Blue Moon, Coors, Coors Light, Heineken and Sol.
The company stock has an EPS of $0.82 and a P/E ratio of 16.39. It has a market cap of $2.4 billion and trades more than 300,000 shares per day. CCU generated total revenue of $2.2 billion in 2019. It has an annual dividend yield of 4.02% and is among the best beer stocks under $20.
CCU launched the Colombian beer Andina Light in 2019. CCU’s Plasco and Temuco plants were distinguished with a 2020 Energy Efficiency Seal granted by the Energy Sustainability Agency and the Ministry of Energy. The seal recognizes high commitment to energy efficiency.
3. Anheuser-Busch Inbev SA (NYSE: BUD)
A Belgium-based company, Anheuser-Busch Inbev SA has been brewing beer for more than a century. It produces and distributes 400 beer brands including Eagle, Hero, Budweiser, Corona Extra, Leffe and Stella Artois.
The beer stock has an EPS of $1.69 and a P/E ratio of 24.2. It has a market cap of $80 billion and has high liquidity with an average daily trade volume of 2.9 million shares. Anheuser-Busch has an annual dividend yield of 3.21%. It generated total revenue of $52 billion in 2019.
Japanese beer brewing company Asahi Group Holdings announced in May 2020 it signed an $11 billion loan with Sumitomo Mitsui Banking Corporation to finance the purchase of Anheuser-Busch InBev’s Australian subsidiary Carlton & United Breweries.
4. Boston Beer Company (NYSE: SAM)
Boston Beer Company started with a family recipe for Louis Koch Lager in 1984. It brews more than 60 varieties of Samuel Adams beer including its flagship Boston Lager, seasonal brews, Brewmaster and the Barrel Room Collection.
Boston Beer Company has a market cap of $6.3 billion and trades over a million shares per day. It has an EPS of $8.62 and a P/E ratio of 60.35. The company generated total revenue of $1.3 billion in 2019.
Boston Beer Company stock rose by 26.9% in April 2020. Its newly-launched seltzer brand, Truly, contributed to that jump.
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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.
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