Tag: BF-B

Pouring Profits: Why Investing in Liquor Stocks is a Smart Choice

by Fred Fuld III

The history of liquor stocks is mixed with the development of the alcoholic beverage industry, which has evolved significantly over the centuries. The commercial production and sale of alcohol can be traced back to ancient civilizations, but it was during the 18th and 19th centuries that the industry began to take on its modern form, with the establishment of well-known distilleries and breweries. 

The Prohibition era in the United States (1920-1933) posed a significant challenge, leading to a temporary collapse of the industry. However, the repeal of Prohibition saw a resurgence, with companies rapidly recovering and expanding. The mid-20th century marked the consolidation of the industry, as many smaller firms merged to form large, multinational corporations. 

Today, liquor stocks represent a major sector of the global market, characterized by stable demand, strong brand loyalty, and high profit margins. Companies like Diageo, Pernod Ricard, and Anheuser-Busch InBev dominate the industry, offering a wide range of products that cater to diverse consumer preferences. The continued innovation and expansion into emerging markets have solidified the status of liquor stocks as a compelling investment choice.

Why Liquor Stocks Are a Good Investment

Stable Demand and Market Resilience: 

Liquor stocks are often considered a reliable investment due to the consistent demand for alcoholic beverages. Unlike many other consumer goods, the demand for liquor tends to remain stable even during economic downturns. This resilience makes liquor companies less vulnerable to economic fluctuations, providing a steady revenue stream that can translate into stable stock performance. Additionally, established brands with strong customer loyalty can maintain their market share and profitability, further solidifying the attractiveness of liquor stocks.

High Profit Margins:

The liquor industry is known for its high profit margins, which can be attributed to the strong pricing power of established brands and the relatively low production costs. Premium and craft liquors, in particular, command higher prices and generate significant profits. These high margins can lead to robust financial health for liquor companies, making their stocks appealing to investors seeking both growth and income. The ability to pass on costs to consumers without significantly affecting demand helps these companies maintain their profitability even in inflationary environments.

Global Growth Opportunities: 

The liquor market is expanding globally, driven by increasing disposable incomes, urbanization, and changing social norms in emerging markets. Regions such as Asia-Pacific and Latin America are experiencing a growing demand for premium and imported liquors. This global expansion provides liquor companies with new growth opportunities, allowing them to tap into previously underserved markets. Investors can benefit from this international diversification, as companies with a strong global presence are better positioned to capitalize on these growth trends.

Innovation and Diversification: 

The liquor industry is continuously evolving, with companies investing in innovation and diversification to cater to changing consumer preferences. Trends such as craft spirits, ready-to-drink cocktails, and low-alcohol or alcohol-free beverages are gaining popularity. By diversifying their product portfolios and embracing new trends, liquor companies can attract a broader customer base and drive sales growth. This adaptability enhances their long-term growth prospects and makes their stocks attractive to investors looking for dynamic and forward-thinking companies.

Listed below are the top four liquor stocks:

  1. Constellation Brands, Inc. (NYSE: STZ) is a leading international producer and marketer of beer, wine, and spirits, known for popular brands like Corona, Modelo, and Svedka Vodka. STZ stands out as a solid investment due to its strong portfolio of high-demand products, consistent revenue growth, and strategic acquisitions that enhance its market presence. The company also has investments in the burgeoning cannabis industry through Canopy Growth. 
  • Diageo plc (NYSE: DEO) is a global leader in the alcoholic beverages industry, having a diverse portfolio of iconic brands such as Johnnie Walker, Guinness, Smirnoff, and Tanqueray. DEO is considered a strong investment due to its extensive market reach, strong brand equity, and consistent financial performance. The company’s strategic focus includes its expansion into non-alcoholic beverages and ready-to-drink cocktails. 
  • Brown-Forman Corporation (NYSE: BF-B) is one of the largest American-owned spirits and wine companies, renowned for its premium brands such as Jack Daniel’s, Woodford Reserve, and Old Forester. BF-B is an attractive investment due to its strong brand portfolio, which commands significant market share and consumer loyalty globally. Brown-Forman’s includes regular dividend payments make it a reliable choice for income-focused investors. 
  • The Duckhorn Portfolio, Inc. (NYSE: NAPA) is a prominent producer of luxury wines, known for its premium brands such as Duckhorn Vineyards, Decoy, and Goldeneye. NAPA stands out as a compelling investment due to its strong market position in the high-end wine segment. The company’s focus on quality and brand reputation has cultivated a loyal customer base and allowed it to maintain strong pricing power.
CompanyCompany SymbolPrice to BookPEGPEPrice to SalesForward PEYield
Constellation Brands IncSTZ4.621.7119.324.6817.11.42%
Diageo plc ADRDEO7.5214.2918.583.5717.313.08%
Brown-Forman Corp.BF-B5.94NA20.585.0122.632.05%
Duckhorn Portfolio IncNAPA0.844.1513.292.6611.53NA

Liquor stocks are a good investment due to the stable demand and market resilience of alcoholic beverages, which maintain steady revenue even during economic downturns. The industry is known for high profit margins, driven by strong brand pricing power and relatively low production costs, ensuring robust financial health. Global growth opportunities are abundant, particularly in emerging markets like Asia-Pacific and Latin America, offering companies new avenues for expansion. Additionally, continuous innovation and diversification, such as the rise of craft spirits and ready-to-drink cocktails, help liquor companies attract a broader customer base and sustain long-term growth.

Disclosure: Author had no positions in any of the above at the time the article was written.

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Wine: Good for Your Health, Good for Your Stock Portfolio?

by Fred Fuld III

Drinking wine in moderation has been associated with several potential health benefits. However, it’s important to note that these benefits apply to moderate consumption, which typically means up to one drink per day for women and up to two drinks per day for men. Excessive alcohol consumption can have detrimental effects on health. Here are some potential health benefits of moderate wine consumption:

  1. Heart health: Moderate wine consumption, particularly red wine, has been linked to a reduced risk of heart disease. Red wine contains antioxidants called polyphenols, including resveratrol, which may help protect the heart by increasing levels of “good” HDL cholesterol and preventing damage to blood vessels.
  2. Antioxidant properties: Wine, especially red wine, contains antioxidants that can help reduce oxidative stress and inflammation in the body. These antioxidants, such as resveratrol and quercetin, have been shown to have potential anti-aging effects and may help protect against certain chronic diseases.
  3. Blood pressure management: Some studies suggest that moderate wine consumption may help lower blood pressure. The polyphenols in wine could improve blood vessel function and promote better blood flow, which in turn can help reduce hypertension risk.
  4. Reduced risk of certain cancers: Some research has found that moderate wine consumption, particularly red wine, may be associated with a lower risk of certain cancers, such as colon, prostate, and breast cancer. However, it’s important to note that excessive alcohol consumption can increase the risk of developing certain types of cancers, so moderation is key.
  5. Improved cognitive function: Some studies have suggested that moderate wine consumption, especially red wine, may have a protective effect on cognitive function and reduce the risk of neurodegenerative diseases like Alzheimer’s and Parkinson’s disease. The antioxidants in wine may help reduce inflammation and oxidative stress, which are believed to contribute to these conditions.

If you are looking to invest in the wine and vineyard industry, there are a few stocks to choose from.

The Duckhorn Portfolio (NAPA) is a collection of luxury wineries based in the United States. Founded in 1976 by Dan and Margaret Duckhorn, the company started with Duckhorn Vineyards in Napa Valley, California, where they initially focused on producing high-quality Merlot wines. Over the years, The Duckhorn Portfolio expanded through acquisitions and vineyard development, encompassing several distinct wineries known for their exceptional wines.

Duckhorn Vineyards, the flagship winery, is renowned for its elegant Merlot and other Bordeaux varietals. Paraduxx specializes in Napa Valley red blends, combining traditional Bordeaux varieties with Zinfandel to create robust wines. Goldeneye, located in California’s Anderson Valley, focuses on crafting outstanding Pinot Noir from cool-climate vineyards. Migration sources grapes from California’s finest cool-climate regions to produce Chardonnay and Pinot Noir wines that reflect their terroir. Canvasback, situated in Washington State’s Red Mountain AVA, is dedicated to premium Cabernet Sauvignon production. Additionally, the acquisition of Calera Vineyards in 2017 added exceptional Pinot Noir and Chardonnay wines from California’s Central Coast to their portfolio.

The Duckhorn Portfolio follows a wine philosophy centered on showcasing the unique character and terroir of each vineyard site. They prioritize meticulous vineyard management, sustainable farming practices, and artisan winemaking techniques to produce wines of exceptional quality and expression. Sustainability is an important focus for the company, and they strive to minimize their environmental impact through initiatives such as water conservation, energy efficiency, and biodiversity preservation.

The wines produced by The Duckhorn Portfolio have garnered numerous accolades and high ratings from critics and wine enthusiasts, solidifying their reputation as a producer of premium wines.

This, $1.46 billion market cap company trades at 25 times trailing earnings and 18 times forward earnings. Quarterly earnings growth year-over-year was 7.8%, with an estimated long term annual growth of 8.1% over the next five years.

Vintage Wine Estates (VWE) is a wine company that operates multiple wineries and vineyards throughout the United States. With a diverse portfolio of wine brands, Vintage Wine Estates is committed to producing high-quality wines from various wine regions. The company focuses on crafting wines that showcase the unique characteristics of each vineyard site and emphasizes sustainable farming practices and artisanal winemaking techniques.

Vintage Wine Estates owns and operates several well-known wineries, including B.R. Cohn Winery in Sonoma Valley, California, which produces premium wines from estate vineyards. The company also owns Girard Winery in Napa Valley, known for its Bordeaux varietals, and Cosentino Winery in Napa Valley and Lodi, specializing in small-lot, handcrafted wines.

In addition to its California wineries, Vintage Wine Estates has expanded its reach to Oregon’s Willamette Valley with its brand Firesteed Cellars, which focuses on cool-climate varietals like Pinot Noir. The company also owns properties in Washington State, such as the Owen Roe Winery in the Yakima Valley, which produces wines reflecting the unique terroir of the region.

Vintage Wine Estates takes pride in its commitment to sustainability and environmental stewardship. They implement sustainable practices in their vineyards, including water conservation, soil health management, and biodiversity preservation. The company’s goal is to create a positive impact on the environment while producing exceptional wines.

The company has an extremely low market cap at $53 million, and should therefore be considered extremely speculative. The company has been generating negative earnings, although it does have a very favorable price to sales ratio of 0.18 and is selling at 26% of book value.

Willamette Valley Vineyards (WVVI) is a prominent winery located in the heart of Oregon’s Willamette Valley. Founded in 1983 by Jim Bernau, the company has become known for its exceptional wines and commitment to sustainable and environmentally-friendly practices. Willamette Valley Vineyards focuses primarily on producing cool-climate varietals, with a particular emphasis on Pinot Noir.

The winery owns and operates several estate vineyards, strategically located in various sub-appellations within the Willamette Valley. These vineyards benefit from the region’s unique climate, which is characterized by cool temperatures, maritime influences, and diverse soils. Willamette Valley Vineyards’ winemaking philosophy revolves around showcasing the distinct terroir of each vineyard site, allowing the grapes to fully express their character and complexity.

Sustainability is at the core of Willamette Valley Vineyards’ operations. The company has achieved certification as both LIVE (Low Input Viticulture and Enology) and Salmon-Safe, demonstrating their commitment to environmentally conscious practices. They utilize renewable energy sources, employ natural pest control methods, implement water conservation measures, and actively support biodiversity in their vineyards.

In addition to their sustainable practices, Willamette Valley Vineyards takes pride in its customer-focused approach. The winery offers a range of tasting experiences and events, including vineyard tours, wine education programs, and a wine club for enthusiasts. They strive to provide visitors with a welcoming and educational environment that enhances their appreciation for Oregon wines.

Over the years, Willamette Valley Vineyards has received numerous accolades and critical acclaim for its wines. Their commitment to quality winemaking, sustainable practices, and their contribution to the Oregon wine industry has earned them a reputation as a leading producer in the region.

This is another extremely speculative low market cap stock at $29 million. The company has been generating negative earnings. The price sales ratio is 0.80 and the price to book is 0.95.

A safer way to invest would be to look at some of the larger companies, such as Brown Forman (BF-B) and Constellation Brands (STZ), which produce wine as a small part of their business.

Disclosure: Author didn’t own any of the above at the time it was written.

Is the Falling Stock Market Driving You to Drink? How About Booze Stocks?

by Fred Fuld III

The liquor and alcoholic beverage industry is a multi-billion dollar industry that has been growing steadily over the years. While the industry is not immune to the impact of global events such as the COVID-19 pandemic, there are several factors that suggest a promising future for the industry.

First, changing consumer preferences towards premium and craft spirits have led to an increase in demand for high-quality, unique and flavorful alcoholic beverages. This has led to a rise in small-scale distilleries and microbreweries, which offer unique and innovative products. The trend of craft beer and small-batch spirits is expected to continue in the future, with consumers looking for unique and high-quality products.

Second, the increasing trend towards health and wellness has also led to the emergence of low-alcohol and non-alcoholic beverages. This segment of the industry is growing rapidly, driven by consumers who are looking for alternatives to traditional alcoholic beverages. This trend is expected to continue as more consumers become health-conscious and seek out healthier beverage options. Plus, there are reportedly even health benefits to drinking alcohol in moderation.

Third, the growth of the e-commerce industry has provided new opportunities for the liquor and alcoholic beverage industry. Online sales have increased significantly over the years, and this trend is expected to continue in the future. As a result, companies that are able to establish a strong online presence and offer convenient and efficient delivery services are likely to benefit from this trend.

Finally, the increasing disposable income and changing lifestyles of consumers in emerging economies such as India and China are expected to drive growth in the liquor and alcoholic beverage industry in these regions. As the middle class grows and consumers become more discerning, demand for premium and high-quality alcoholic beverages is expected to rise.

Overall, while the liquor and alcoholic beverage industry is not immune to challenges, there are several factors that suggest a promising future for the industry. Companies that are able to adapt to changing consumer preferences and trends, and leverage new technologies and business models are likely to benefit from the growth opportunities in the industry.

For investors looking to invest in the booze sector, Constellation Brands (STZ) is one option. It was founded in 1945, and is a California based company with such brands as Robert Mondavi, Clos du Bois, Ravenswood, Black Velvet, and Canadian Whiskey. The stock trades at 18.8 times forward earnings and pays a dividend of 1.46%. Earnings per share are expected to grow next year by 10.8%.

Diageo (DEO), founded in 1997, is based in the UK. Its brands include Blossom Hill, Sterling Vineyards, Beaulieu Vineyard, Navarro Correas, Acacia Vineyard, Rosenblum Cellars, Piat d’Or, Chalone Vineyard, and Santa Rita. The stock has a trailing price to earnings ratio of 22.8 and offers a decent yield of 2.13%. Quarterly revenue growth was 37% year-over-year.

If you like Jack Daniel’s, then maybe Brown-Forman (BF-B) is the way to go. The trailing P/E is 34 and the forward P/E is 31. The yield is 1.3%.

Like anything, drinking should be done in moderation, and allocating your portfolio to liquor stocks should be done in moderation also.

Disclosure: Author didn’t won any of the above at the time the article was written.

Wine May Reduce Diabetes Risk: Top Wine Stocks

by Fred Fuld III

According to research presented at a recent American Heart Association conference, consuming wine may reduce the risk of Type 2 Diabetes. It helps with glucose metabolism, especially when consumed during meals. Over 300,000 people were studied over the last ten years.

For investors, there are ways to participate in the wine industry without having to buy your own winery. Some of the big companies, such as Brown Forman (BF-B) and Constellation Brands (STZ), produce wine as a small part of their business.

But there are more pure plays. Here are some examples.

Willamette Valley Vineyards (WVVI), with a very low $50 million market capitalization, produces Pinot Noir, Chardonnay, Pinot Gris, Pinot Blanc, Rose, Methode Champenoise Brut, and Riesling branded wines. The stock trades at 36 times earnings. Earnings per share growth this year is 53.5%.

The Duckhorn Portfolio (NAPA), with a $2.2 billion market cap, is a Saint Helena, California winery that produces various brands of wine including Duckhorn Vineyards, Decoy, Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Canvasback, Greenwing, and Postmark. The stock has a trailing price to earnings ratio 38.5 and a forward P/E ratio of 27. Earnings per share growth this year is 86%.

Vintage Wine Estates (VWE), based in Incline Village, Nevada, produces various wines including Laetitia Vineyard and Winery, Swanson Vineyards, Kunde Family Winery, Viansa, and B.R. Cohn Winery brands. The stock has a market cap of $568 million. The stock has a sky high trailing P/E ratio of 92.5, but fortunately has a very reasonable forward P/E of 18.8. Earnings per share growth this year is 128%.

These full bodied stocks have a nice sweetness with the possibility of an excellent finish.

Disclosure: Author didn’t own any of the above at the time it was written.

Would You Put Whiskey in Your Gas Tank?

It may be hard to believe but cars can now run on whiskey, in addition to gasoline and diesel, according to a BBC article. Actually, it is whiskey residue from the whiskey making process called biobutanol. And the best feature is that the automobile engine doesn’t have to be modified.

But it is not just cars consuming liquor; humans seem to do a bit of consuming themselves. Last year, the sale of alcohol was $25.2 billion in the US, a 4.5% increase over the previous year, and the seventh yearly increase in a row.

Relax and Lose Weight

With money flowing into the coffers of liquor producers, some investors are taking a close look at companies in the alcohol industry. Studies have shown that liquor may help you lose weight, will help relax you (obviously), and might even cure blindness. Investors who believe that booze stocks can benefit from these alcohol health benefits, have several choices to choose from.

Jack Daniel’s

Brown-Forman Corporation (BF-B) is a liquor distributor which is famous for its Jack Daniel’s and Southern Comfort brands. The stock has a price-to-earnings ratio of 28, a forward P/E of 26, and provides a fair yield of 1.48%.

 Johnnie Walker

Diageo (DEO) is a London based alcoholic beverage distributor that markets numerous brands of whiskey, including Johnnie Walker Scotch whiskey, Crown Royal Canadian whiskey, JeB Scotch whisky, Buchanan’s Scotch whiskey, Windsor Premier Scotch whiskey, and Bushmills Irish whiskey. It also sells vodka, rum, and wine. The stock trades at 24 times trailing earnings, and 20 times forward earnings. It sports a higher-than-industry-average yield of 2.5%.

How to Invest in Donald Trump

Did you know that you can invest in a stock that developed and distributes Trump Super Premium Vodka? The company is Drinks Americas (DKAM), a Connecticut based company that trades Over the Counter on the Pink Sheets, and last traded for one hundredth of a cent. The vodka received four out of five stars by Spirit Journal. Unfortunately for potential tasters, the beverage is no longer sold in the US.

For a free list of stocks in the liquor and wine industry, click on the following link:

Wine & Liquor Stocks

Disclosure: Author did not own any of the above stocks at the time the article was written.