Last year, the alcoholic beverage industry suffered a setback due to COVID-19 pandemic-led restrictions. Retail beer sales dipped, with several stadiums, concert venues, bars, and restaurants remaining closed. According to the Brewers Association, overall U.S. beer volume sales were down 3% in 2020.
However, as restaurants and bars continue to reopen, with several restrictions to limit the spread of the deadly COVID-19 virus, the demand for beer is going up this year. And, according to a Business Wire report, the global beer market is expected to reach $710.89 billion by 2025.
So, we think it could be wise to add beer stocks Anheuser-Busch InBev SA/NV (BUD), Molson Coors Beverage Company (TAP), and The Boston Beer Company, Inc. (SAM) to one’s watchlist. Wall Street analysts expect these stocks to rally by 20% or more in the near term.
Anheuser-Busch InBev SA/NV (BUD)
Headquartered in Leuven, Belgium, BUD produces, distributes, and sells beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of roughly 500 beer brands, including Budweiser, Corona, and Stella Artois.
In March, BUD and Panay Films announced the forthcoming release of their dynamic new talk show--"Not A Sports Show." Known for its brands’ award-winning advertising campaigns, BUD’s work with Panay Films to push into mainstream programming marks a shift for the company as it continues to reinvent how it appears in the lives and feeds of its audience.
BUD’s revenue increased 17.2% year-over-year to $12.29 billion for its fiscal first quarter, ended March 31, 2021. The company’s EBITDA grew 14.2% year-over-year to $4.27 billion. Its profit came in at $1.01 billion, versus a $845 million loss in the year-ago period. Also, its EPS came in at $0.51 compared to a $0.42 loss per share f in the prior year period.
For its fiscal year 2021, analysts expect BUD’s EPS and revenue to increase 58.1% and 12.6%, respectively, year-over-year to $3.02 and $52.79 billion. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 9.8% over the past year to close yesterday’s trading session at $61.39. Wall Street analysts expect the stock to hit $85.34 in the near term, which indicates a potential 39% upside.
Molson Coors Beverage Company (TAP)
Formerly known as Molson Coors Brewing Company, TAP manufactures, markets, and sells beer and other malt beverage products in the United States, Canada, Europe, and internationally. Its portfolio of brands includes Carling, Coors Light, Miller Lite, and Molson Canadian. TAP is based in Denver, Colo.
TAP announced on July 15 that it would reinstate its practice of paying regular quarterly dividends and declared a $0.34 per share quarterly dividend on its Class A and Class B common shares, payable on September 17, 2021. In addition, the company repaid in full $1 billion of 2.1% senior notes that matured on July 15, 2021, pursuant to its commitment to deleveraging.
TAP’s net sales increased 17.4% year-over-year to $2.94 billion for its fiscal second quarter, ended June 30, 2021. The company’s net income increased 99.3% year-over-year to $388.60 million. Also, its EPS increased 98.9% year-over-year to $1.79.
For its fiscal year 2022, analysts expect TAP’s EPS to come in at $4.23, representing an 8.7% year-over-year increase. It surpassed the Street’s EPS estimates in each of the trailing four quarters. In addition, its revenue is expected to increase 8% year-over-year to $2.97 billion for the quarter ending September 30, 2021. The stock has rallied 36.2% over the past year to close yesterday’s trading session at $52.05. Wall Street analysts expect the stock to hit $64.50 in the near term, which indicates a potential 23.9% upside.
The Boston Beer Company, Inc. (SAM)
SAM produces and sells alcoholic beverages primarily in the United States. The Boston-based concern’s flagship beer is Samuel Adams Boston Lager. In addition, it offers various beers, hard ciders, and hard seltzers under the Twisted Tea, Angry Orchard, Dogfish Head, and Concrete Beach brand names.
This month, SAM and PepsiCo, Inc. (PEP) announced plans to enter a business collaboration to produce HARD MTN DEW alcoholic beverages. With adult drinkers' tastes continuously evolving, SAM could witness increasing demand for this beverage.
SAM’s net revenue increased 33.3% year-over-year to $602.80 million for its fiscal second quarter, ended June 26, 2021. Its total assets grew 13.2% year-over-year to $1.56 billion, while its gross profit increased 31.5% year-over-year to $275.69 million.
Analysts expect SAM’s EPS and revenue to increase 63.6% and 45.5%, respectively, year-over-year to $25.4 and 2.53 billion in its fiscal year 2021. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past three years, the stock has gained 133.2% to close yesterday’s trading session at $649.59. Wall Street analysts expect the stock to hit $1,012.77 in the near term, which indicates a potential 55.9% upside.
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BUD shares were trading at $61.64 per share on Thursday afternoon, up $0.25 (+0.41%). Year-to-date, BUD has declined -11.28%, versus a 19.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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