Buds, Barley, & Bills
There is no denying that Americans love beer, especially during warm summers. From barbeques to camping, beer is an indispensable component of most warm-weather activities. Thus, it should come as no surprise that two of the largest beer companies, Anheuser-Busch (BUD) and Molson Coors (TAP), are currently the driving force behind the recent success of the economy’s consumer goods sector. However, choosing your favorite beer stock may not be as simple as choosing which beer to order at dinner (although this too can be quite difficult). For potential investors interested in the recent rise of beer stocks, I will provide a brief analysis of both Anheuser-Busch and Molson Coors. In doing so, I aim to inform you about America’s best, and most essential, beverage companies (sorry Coca-Cola).
Anheuser-Busch is an American brewing company that operates 13 breweries around the United States. The company is a wholly owned subsidiary of Anheuser-Busch InBev, a Belgian-Brazilian brewing conglomerate (the largest beer company in the world). Anheuser-Busch InBev has a market capitalization of nearly $187 billion, which equates to approximately 25% of the global beer market. The company owns 17 beer brands, including favorites such as Budweiser, Corona, and Stella Artois. For fiscal year 2013, Anheuser-Busch InBev reported revenues of $43.195 billion and a profit of $14.394 billion. The company has a primary listing on the Euronext Brussels stock exchange under the symbol (ASI), and a secondary listing on the New York Stock Exchange under the ticker (BUD).
Anheuser-Busch InBev is up 33.16% over the last 12 months and up 9.12% year-to-date. Over the past week, the company surpassed its 52-week high, settling at $116.17 per share on Friday. I believe that much of the company’s recent success is attributed to its being the official beer sponsor of the 2014 FIFA World Cup. Budweiser and Brahma (owned by Anheuser-Busch InBev) are the only beers sold at the Brazilian stadiums; furthermore, bars around the world may only display the 2014 FIFA World Cup logo in association with Budweiser products. I expect Anheuser-Busch InBev to capitalize upon its World Cup momentum and use its surging revenue to make permanent operational improvements.
Similarly, the Molson Coors Brewing Company is a North American enterprise created by the 2005 merger of the Canadian Molson Brewing Company and American Coors Brewing Company. The company’s ownership is evenly split between the Molson and Coors families, who oversee popular brands such as Coors Light, Molson Canadian, and Blue Moon. Since the merger, the company has become the world’s 7th largest brewing company. Molson Coors is listed on the New York Stock Exchange under the ticker (TAP) and is an S&P 500 component. The company has a market capitalization of $13.83 billion.
Molson Coors is up 57.2% over the last 12 months and 33.32% year-to-date. Like Anheuser-Busch InBev, the company also surpassed its 52-week high last week and closed at $74.86 per share. In addition, last week the company also received an upgrade from Morgan Stanley to “equal weight” with a price target of $79, suggesting a potential 6% upside.
Although Molson Coors is not the official sponsor of the 2014 FIFA World Cup, Coors Light, the company's most popular beer, is the official sponsor of the NFL, NHL, and NASCAR. Moreover, the recent international rise in affection for craft beers has helped grow the company’s signature craft beer, Blue Moon. As evidenced by the company’s 57% growth over the past year, the rise of Blue Moon and the indispensability of Coors Light in American professional sports have helped Molson Coors expand at a dizzying rate.
I believe that both Anheuser-Busch and Molson Coors will continue their successful streaks and are sound investment decisions. For investors who prefer a beer, or five, you could also effectively kill two birds with one stone: boost your portfolio’s value by drinking.