With virus data going through the roof in recent weeks, and new records of cases and hospitalizations defining a terrible in the US and most of the northern hemisphere, investors may benefit from shifting capital allocations into staples as we head into the heart of the cold and flu season.
That means consumer package goods, pharmaceuticals, and spirits. In the latter case, growth is still on the radar, especially as alcohol consumption rises due to a record-setting trend in cabin fever.
With that in mind, we take a look at several of the more interesting stocks in the alcohol and spirits space, including: Boston Beer Company Inc (NYSE:SAM), Splash Beverage Group Inc (OTCMKTS:SBEV), and Constellation Brands Inc (NYSE:STZ).
Boston Beer Company Inc (NYSE:SAM) has been a strong outperformer over the past year, with shares powering more than 150% higher in that time in a strong trend. SAM produces and sells alcohol beverages primarily in the United States. The company’s flagship beer is Samuel Adams Boston Lager. It offers various beers, hard ciders, and hard seltzers under the Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard, Dogfish Head, Angel City, Coney Island, Concrete Beach, Wild Leaf, and Tura brand names.
The company markets and sells its products to a network of approximately 400 wholesalers in the United States, as well as international wholesalers, importers, or other agencies that in turn sell to retailers, such as grocery stores, club stores, convenience stores, liquor stores, bars, restaurants, stadiums, and other retail outlets. It also sells in products in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central and South America.
Boston Beer Company Inc (NYSE:SAM) most recently reported second quarter 2020 net revenue of $452.1 million, an increase of $133.7 million or 42.0%, from the same period last year. Net income for the second quarter was $60.1 million, an increase of $32.3 million or 116% from the same period last year. Earnings per diluted share were $4.88, an increase of $2.52 per diluted share from the second quarter of 2019. This increase was primarily due to increased revenue driven by shipment growth of 39.8%, partially offset by lower gross margins and increases in operating expenses.
According to the release, net revenue for the 26-week period ended June 27, 2020 was $782.7 million, an increase of $212.6 million, or 37.3%, from the comparable 26-week period in 2019. Earnings per diluted share for the 26-week period ended June 27, 2020 were $6.37, an increase of $1.99 per diluted share or 45.4% from the comparable 26-week period in 2019.
The stock has suffered a bit of late, with shares of SAM taking a hit in recent action, down about -4% over the past week. SAM shares have been relatively flat over the past month of action, with very little net movement during that period.
Boston Beer Company Inc (NYSE:SAM) pulled in sales of $490.4M in its last reported quarterly financials, representing top line growth of 29.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($157.1M against $231.9M, respectively).
Splash Beverage Group Inc (OTCMKTS:SBEV) is the most speculative name in this group, but it may also be the stock with the most potential upside given its recent jump in growth data, its expansion into Asia, and its cheap share price. The company specializes in manufacturing, distribution, sales & marketing of various beverages across multiple channels. SBEV operates in both the non-alcoholic and alcoholic beverage segments which they believe leverages efficiencies and dilutes risk.
SBEV believes its business model is unique as it only develops/accelerates brands it perceives to have highly visible pre-existing brand awareness or pure category innovation.
Splash Beverage Group Inc (OTCMKTS:SBEV) recently announced performance data for the three months ended September 30, 2020, featuring “very strong sequential topline quarterly growth, revenues in excess of Company estimates, and growth in liquidity and capital resources, as Splash Beverage Group Inc (OTCMKTS:SBEV) continues to establish robust trends in its expanding core operations.”
According to the release, consolidated Revenues for the Three Months ended September 30 totaled $1,009,615, representing quarter-over-quarter growth of 65% compared to the Three Months ended June 30, consolidated Revenues for the Nine Months ended September 30 totaled $1,733,926, the Company surpassed its estimated topline performance during Q3, management forecasts $1.3-1.5 million in current quarter revenues for the three months ending December 31, 2020, and the fact that the Company also negotiated a Subscription Agreement pursuant to which the Company received gross proceeds of $3,070,000.
“Our Q3 data highlights significant growth during the quarter, with an impactful increase in revenues, liquidity, and capital resources, as well as the successful navigation of challenges associated with the pandemic health crisis,” commented Robert Nistico, CEO of Splash Beverage.
Splash Beverage Group Inc (OTCMKTS:SBEV) estimates continued growth “in the neighborhood of 30-50% on a sequential quarterly basis as our core metrics benefit from our strong brand positioning and we begin to see tailwinds associated with our expansion into the Asian marketplace”, according to a statement from the company earlier this week.
Constellation Brands Inc (NYSE:STZ) produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. It provides beer primarily under the Corona Extra, Corona Premier, Corona Familiar, Corona Light, Corona Refresca, Corona Hard Seltzer, Modelo Especial, Modelo Negra, Modelo Chelada, Pacifico, and Victoria brands.
The company offers wine under the 7 Moons, Drylands, SIMI, Charles Smith, Auros, Kim Crawford, Spoken Barrel, Prisoner, Champagne Palmer & Co, Meiomi, Robert Mondavi, Cooper & Thief, Mount Veeder, Schrader, Crafters Union, Nobilo, Cuvée Sauvage, and Ruffino; and spirits under the Casa Noble, High West, Mi CAMPO, Nelson’s Green Brier, SVEDKA, The Real McCoy brands. It provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. The company was founded in 1945 and is headquartered in Victor, New York.
Constellation Brands Inc (NYSE:STZ) recently announced that it and E. & J. Gallo Winery have signed an Agreement Containing Consent Order with the Bureau of Competition of the U.S. Federal Trade Commission (FTC) regarding Gallo’s pending acquisition of a portion of Constellation’s wine and spirits portfolio principally priced at $11 retail and below, including certain related facilities located in California, New York, and Washington State.
According to the release, the proposed consent order marks the final stages in the FTC review process and remains subject to review and approval by the FTC Commissioners, who typically provide their final review within 30 to 45 days. Therefore, Constellation anticipates closing in the fourth quarter of fiscal 2021.
And the stock has been acting well over recent days, up something like 5% in that time. Shares of the stock have powered higher over the past month, rallying roughly 13% in that time on strong overall action.
Constellation Brands Inc (NYSE:STZ) pulled in sales of $2.3B in its last reported quarterly financials, representing top line growth of -3.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($204.6M against $1.9B, respectively).
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