Beer Stocks: Key Takeaways
- How this sector survived a tough 2020…
- Are beer stocks ready for a heady run?
- The potential frothy growth avenue to watch in this sector…
You may like to drink beer, but how about trading beer stocks? Seems this sector hit a sour patch over the past year. And while that sounds bad, an oversold sector can create new trading opportunities. I have four beer stocks worth watching now (details below).
- Constellation Brands, Inc. (NYSE: STZ … read my analysis here)
- Compania Cervecerias Unidas S.A. (NYSE: CCU … read my analysis here)
- Molson Coors Beverage Company (NYSE: TAP … read my analysis here)
- The Boston Beer Company, Inc. (NYSE: SAM … read my analysis here)
Table of Contents
- 1 Beer Stocks Background
- 2 4 Beer Stocks to Watch
- 3 Bottom Line
- 4 One Platform. One System. Every Tool
Beer Stocks Background
But that doesn’t mean they’re not worth watching.
I like consumer staples that people purchase every day, week, month, and year. Beer is in that category — and popular worldwide.
Beer stocks fit into the overarching Consumer Staples Select SPDR ETF (XLP) that tracks wares like foods, beverages, and household goods. This ETF tracks items that you can buy in the grocery store.
The XLP has performed pretty poorly since lockdowns began in 2020. It has gained 51% since the bottom in March 2020.
That may sound like a decent gain … But compared to the S&P 500’s 106% gain, it’s lacking.
The XLP has gained just 9% in 2021.
4 Beer Stocks to Watch
The XLP may not be so hot right now, but beer stocks make up just a portion of it. So let’s check out four top beer stocks worth watching in 2021 that could offer much more upside…
Beer Stocks to Watch #1: Constellation Brands, Inc. (NYSE: STZ)
You may not have heard of Constellation Brands, but you’ve heard of its beers…
The company owns the Corona, Modelo, and Pacifico brands. It also owns a variety of wine and spirit brands, including SVEDKA.
STZ also upped its stake in Canopy Growth to 40% in 2020. Canopy produces marijuana and hemp-based products in North America and Germany.
Marijuana companies like Canopy may not pay off as an investment for a long time. There’s still a lot of political hoopla to get through before weed has a true place in the American marketplace.
But if and when that happens, companies like Constellation stand to thrive.
It’s easy to sell beer, giving Constellation guaranteed profits every year. But that doesn’t mean its stock will grow.
Making investments in companies like Canopy Growth gives STZ the upside the market wants to see moving forward.
If Canopy ever spreads its wings and joins its customers in the sky, Constellation could make for an interesting trading play…
STZ has been choppy over the past year, but it’s at the bottom of its 2021 trading range.
Beer Stocks to Watch #2: Compania Cervecerias Unidas S.A. (NYSE: CCU)
Compania Cervecerias Unidas owns the alcohol brand Heineken. That’s not all. It’s also the…
- Largest brewer
- Second-largest soft drink producer
- Second-largest wine producer
- Largest bottler of mineral water in Chile
- And it operates throughout other countries in South America
Wanna talk about companies that stick around? Compania Cervecerias Unidas has been around since 1850…
This company does it all when it comes to beverage production. Its portfolio is filled with both alcoholic and non-alcoholic drinks for its customers.
CCU has slowly chugged up for a 45% gain in the past year. It’s prone to pop on good news as well.
This stock has performed the best of the four on this list in 2021. The sector has been hit hard … CCU’s ability to survive makes it a strong watchlist candidate. It’s currently leaning on a level of support.
Beer Stocks to Watch #3: Molson Coors Beverage Company (NYSE: TAP)
Molson Coors Beverage is the holding company of brands like Coors, Blue Moon, and Miller.
This is a stock that can’t really figure out which direction it wants to go. That can be good for traders looking to take advantage of the volatility, but it’s not a great sign for the business.
Like Constellation, this company will always make money … But the market wants to see growth opportunities.
Molson Coors has looked to diversify away from traditional beer as consumers start gravitating toward higher-end craft beers and hard seltzers. It also recently took a partnership with a coffee brand.
Beer stocks will likely have to look for other opportunities to keep the market interested. The company’s most recent earnings report was a good example of just how down the market is on this stock right now.
Molson Coors had its best top-line growth in more than a decade at the end of July. The stock ran 8% but has since continued its downtrend.
The growth in the business is promising. But this company has to get more innovative to gain the attention of traders.
If it does that, it has a chance to run…
Beer Stock #4: The Boston Beer Company, Inc. (NYSE: SAM)
Have you seen those annoying Samuel Adams commercials with the hardcore Boston accents? You can thank The Boston Beer Company for that.
Luckily for them, the company’s business outshines those commercials that viewers either mute or fast-forward through every time…
Some consumer staples took a sales hit during 2020 thanks to lockdowns. But Boston Beer had a fantastic year, growing revenues by 39%.
The stock had a great 2020, too, but it has collapsed in 2021. SAM is down 60% since April.
Again, these beer companies are pretty much all in the same boat. Consumer demand’s changing. Some of these companies invested heavily in hard seltzer, and those sales disappointed.
SAM’s revenues increased 33.3% in its second quarter and its shares STILL sold off hard. The market didn’t like Boston Beer’s outlook on hard seltzer.
Again, the market likes to see companies growing. Sam Adams will always sell but that’s baked into the stock’s price.
To create upside, companies need growth avenues…
Boston Beer might need to turn to some other beverage, alcoholic or not, to entice the market.
I wouldn’t turn my nose up at beer stocks entirely. A strong catalyst could do wonders for the sector…
Companies that print money are always worth watching. Whether their stocks print money is another question.
Legacy sectors are always interesting to watch. They go through ups and downs but almost always find a way forward.
Who knows where these companies will find that next growth avenue … Or if they will at all. If I can impart any wisdom to you today it would be to focus on your growth as a trader.
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What are your thoughts on beer stocks? Let me know with a comment below!