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. 

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. 

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.