Are These The Best Beverage Stocks To Buy Now?
While the tech stocks selloff has dominated stock market headlines, beverage stocks surprise investors with their renewed demand during the first quarter. For instance, Coca-Cola Co. (NYSE: KO) started the week on a strong note after publishing its latest set of quarterly results. The beverage giant saw its net revenue grow by 5% year-over-year to $9 billion. This came as the company sees a rebound in sales as COVID-19 vaccines rollout expands, and the company said demand in March reached pre-pandemic levels.
Most of the beverage industry took a hit during the early days of the pandemic when diners were shut down and social gatherings were prohibited. However, demand slowly creeps back in anticipation of a strong economic recovery. It’s not a bad idea to put up a list of top beverage stocks to buy. After all, these are the products that people keep buying regardless of the state of the broader economy.
As we observe news of the incline in Coca-Cola sales, many investors are starting to eye for other top beverage stocks which may see similar recoveries this earnings season. With all that being said, do you have these beverage stocks on your watchlist in the stock market today?
Top Beverage Stocks To Watch Right Now
- Boston Beer (NYSE: SAM)
- Pepsi & Co. (NASDAQ: PEP)
- Monster Beverage Corp. (NASDAQ: MNST)
- Constellation Brands (NYSE: STZ)
First up, Boston Beer’s stock has been on a tear since the start of the pandemic. While sales plunged when the stay-at-home measures were imposed, the company continued to defy gravity. That is partly thanks to rising demand from retailers for products like Truly hard seltzer and Twisted Tea. No doubt, investors are hoping to see more growth in these brands as the company reports earnings results on April 22. To recap, the company delivered a stellar Q4 2020. Net revenue rose 53% year-over-year to $460.9 million. Meanwhile, earnings per share were $2.64, a spike of 135.7% from a year ago.
SAM stock has been one true outperformer in the beverage industry. The company’s stock price soared more than 200% over the past year, while the S&P 500 only rose nearly 50% during the same period. Of course, with the strong rally over the past year, there may be limited potential upside. Nonetheless, let’s not forget Boston Beer’s track record of innovation and consistent profitability in recent years. With an optimistic outlook in the fast-growing hard seltzer market, would you bet on SAM stock ahead of its earnings report this week?
Pepsi & Co
The iconic arch-nemesis of Coca-Cola Co., PepsiCo. had also started 2021 off right. The company boasts a world-class portfolio including the likes of Frito-Lay, Pepsi-Cola, Gatorade, and Quaker brands. Over the past month, PEP stock has risen by over 10% and closed Tuesday’s trading session at $145.71% a share. Last week, the company affirmed to most investors that it can keep expanding sales. From the first quarterly report, revenue rose 6.8% year-over-year to reach $14.8 million. Meanwhile, operating profit jumped to $2.3 billion from $1.9 billion a year ago. This solid number is consistent with management’s outlook of 5% sales growth for this year.
On the surface, PepsiCo might seem like a risky investment since soda consumption rates have been dropping for decades in developed markets. Of course, the company is also not resting on its laurels and has diversified beyond sodas with relatively healthier options. With Americans stuck at home, snack food like Frito-Lay has seen sales surge. And it’s not just Frito-Lay that is seeing a boom. The company’s other products are also seeing strong growth. Assuming consumers continue to turn to snacking for comfort during this pandemic, will you bet on PEP stock right now?
Monster Beverage Corp is a multinational brand for energy drink beverages with a global presence. Investors love MNST stock because the company has a debt-free balance sheet. According to data from research firm T4, Monster accounted for 39% of the market for all energy drinks in 2020, with NOS (also owned by Monster) picking up another 3% share. Thus, it may not be surprising to learn that MNST stock has been a multi-bagger over the past decade. In fact, its historical performance might even put some of the biggest tech stocks to shame. The company’s success in the energy drink market has also drawn investments from Coca-Cola.
In February, Monster Beverage reported its financial results for the fourth quarter of 2020. In it, the company saw revenue rising 17.6% year-over-year to $1.20 billion. Furthermore, net income reached $471.7 million, an increase of 85% from a year ago. Monster could be looking at more international expansion and a hard seltzer launch. These could help generate additional profits for the company. Furthermore, they could become new growth drivers considering the company’s history of strong execution. Admittedly, many may think that the stock’s valuation is expensive. Yet, considering these exciting developments, do you think MNST stock can continue its momentum?
Last but not least, Constellation Brands is a leading international producer and marketer of alcoholic beverages. Over the past year, STZ stock has risen by over 50% and is trading at $238.31 as of Tuesday’s closing bell. Unlike the other beverage stocks on this list, the company has turned in better-than-expected quarterly results earlier this month. Despite weak demand at bars and restaurants, the alcoholic beverage giant announced solid growth in its beer portfolio. For the 3 months ended February 28, 2021, net sales rose 3% year-over-year to $1.95 billion.
The company’s management is optimistic about growth for the fiscal year ending February 28, 2022. In particular, Constellation Brands expects net sales in this segment to increase by 7% to 9%. It’s worth pointing out that the company has developed plans to invest in additional capacity in Mexico. This will provide the long-term flexibility needed to support the future growth of the core, high-end Mexican beer portfolio. Besides, management is also anticipating a strong operating cash flow of $2.4 billion and $2.6 billion in fiscal 2022. Considering the financial strength of the company, would you be adding STZ stock to your watchlist?