3 Alcoholic Beverage Stocks Showing Their Spirit

Monday, April 5, 2021 | Kate Stalter
3 Alcoholic Beverage Stocks Showing Their Spirit Despite bar and restaurant closures a little over a year ago, various factors helped alcoholic beverage companies, such as Boston Beer Company (NYSE: SAM), Constellation Brands (NYSE: STZ) and Willamette Valley Vineyards (NASDAQ: WVVI), stay on top like an olive garnishing a martini. 

Forty-nine of the 50 states relaxed alcohol laws in some form, to give bars and restaurants some kind of lifeline. For example, many states now allow to-go mixed drinks, something that was rare prior to the pandemic. 

In addition, consumers were making more purchases for in-home consumption. Sure, the merits of turning to booze as a means of easing Covid-era anxiety or boredom can be debated. But for the distilleries, breweries and wineries, the spring 2020 smackdown wasn’t a death knell. 

Boston Beer, whose ticker reflects its most famous product, Sam Adams, also owns other brands, including Truly hard seltzer and Angry Orchard hard cider. The stock is trading at all-time highs, closing Thursday at $1184.68. 

In the most recent quarter, the company reported adjusted earnings per share of $2.56, below analysts’ estimates, but still a year-over-year gain of 142%. Revenue of $460.94 million topped Wall Street views. 

The company attributed the earnings miss to a reduction in bar and restaurant keg orders, as well as disruptions in its production process. 

In early March, Morgan Stanley initiated coverage of Boston Beer with $1,400 price target and rating of overweight. The analyst noted that the company is shifting its focus to its hard seltzer business, which accounted for about half of its sales last year. 

The stock is trading just below its March 31 high of $1256.04. It ended Thursday’s session 5% above its 10-day moving average and 12.6% above its 50-day line. It may be in a buy zone right now, but watch for continued support above those key averages to be sure institutional investors aren’t in a profit-taking mood. 
3 Alcoholic Beverage Stocks Showing Their Spirit

Constellation Brands isn’t well known, but many of its products are. The company’s portfolio includes Corona and Modelo beers, Casa Noble tequila, Svedka vodka and Kim Crawford wines, among others. It holds a 38% stake in cannabis producer Canopy Growth (NASDAQ: CGC), with the goal of making cannabis-infused beverages. 

Last year, it acquired Empathy Wines, a direct-to-consumer wine brand founded by social media influencer and entrepreneur Gary Vaynerchuk. The direct-to-consumer wine category has been growing fast in recent years, with a huge uptick in 2020. 

Constellation Brands is scheduled to report fourth-quarter results on Thursday, April 8. Analysts expect earnings of $1.44 per share on revenue of $1.86 billion. It beat analysts estimates in each of the past 10 quarters.  

The stock has been forming a flat base since retreating from its mid-February high of $224.62. It closed Thursday at $229.62, bouncing off its 50-day average during the session, finishing 1.7% above that line. Watch for a buy opportunity if the stock clears resistance above its February high. 
3 Alcoholic Beverage Stocks Showing Their Spirit

Willamette Valley Vineyards is a small company, with a market capitalization of just $45.4 million. Like its larger peers, it saw strong price gains recently. The stock is up 43.64% year-to-date and up 90.63% on a one-year basis. 

Shares closed Thursday at $9.15, up $0.10 or 1.1%. 

The company, known for its Oregon pinot noir wines, reported fourth-quarter results in mid-March. Earnings came in at $0.15 per share, up 25% from the year-earlier quarter. Revenue was $8.3 million, a 15% year-over-year increase. 

In the earnings press release, CEO Jim Bernau cited the team’s success at direct-to-consumer sales to offset lost bar and restaurant sales in 2020. He noted that the company added employees last year, and did not need any Paycheck Protection Program loans. 

The stock is up 11% since its earnings report. It’s currently trading just above its 10-day moving average and 14.6% above its 50-day line. It’s shown sideways trade in recent sessions, and may offer a new buy opportunity if it can clear resistance above $9.50 in heavy trading volume. 

Investors should use extra caution with small stocks like this, as a lack of liquidity and institutional ownership could result in a fast shakeout. 
3 Alcoholic Beverage Stocks Showing Their Spirit

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7 Stocks to Watch When Student Debt Forgiveness Gets Passed

Now that the Biden administration is fully in charge, student debt forgiveness has moved to the front burner. Consider these numbers. There is an estimated $1.7 trillion in student debt. The average student carries approximately $30,000 in student loans.

If $10,000 of student debt were to be canceled, there are estimates that one-third of borrowers (between 15 million to 16.3 million) would become debt-free. Of course, if the number hits $50,000 as some lawmakers are suggesting the impact would even greater.

Putting aside personal thoughts on the wisdom of pursuing this path, it has the potential to unleash a substantial stimulus into the economy.

And as an investor, it’s fair to ask where that money would go. After all, there’s no harm in having investors profit from this stimulus as well.

A counter-argument is that the absence of one monthly payment may not provide enough money to make an impact. However, Senator Elizabeth Warren referred to the effect student loans have in preventing many in the millennial and Gen-Z generations from pursuing big picture life goals such as buying a house, starting a business, or starting a family.

With that in mind, we’ve put together this special presentation that looks at 7 stocks that are likely to benefit if borrowers are set free from the burden of student loans.

View the "7 Stocks to Watch When Student Debt Forgiveness Gets Passed".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
The Boston Beer (SAM)1.7$1,109.74+1.0%N/A79.27Hold$1,256.00
Constellation Brands (STZ)2.2$241.62+0.8%0.38%23.53Buy$238.75
Willamette Valley Vineyards (WVVI)0.6$15.55+8.0%N/A37.02N/AN/A
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