Investors often look to safer stocks or sectors to mitigate risk when the stock market is volatile. In the case of beverage companies, this might lead you to believe that investing in beverages is a bad idea. After all, these companies operate in an industry facing headwinds from increased health awareness and changing consumer tastes. However, several beverage stocks are poised for growth over the long-term—and they aren’t afraid of the impending challenges. There are many great beverage stocks to invest in, but these 10 are particularly intriguing opportunities right now. In addition, each company below has also demonstrated resilience in previous market downturns and stands to benefit from strong tailwinds over the coming years.
Coca-Cola Femsa (KOF)
Coca-Cola Femsa (or Coca-Cola FEMSA) is a Mexican beverage company that produces, distributes, and sells nonalcoholic beverages. One of the world’s largest nonalcoholic beverage companies, Coca-Cola Femsa, generated over $11 billion in revenue in FY 2018. The company’s portfolio includes over 20 brands, with its flagship beverage being Coca-Cola. Coca-Cola Femsa has over 100 years of history in the beverage industry and has built a strong brand in Mexico. As a result, the company is well-positioned to capitalize on Mexico’s growing middle class and expanding beverage market. As a result, Coca-Cola Femsa has increased earnings per share in six of the last eight years. Analysts expect another strong showing in FY 2019, forecasting a 13.6% increase in EPS.
Constellation Brands (STZ)
Constellation Brands, Inc. is a beverage company that produces and distributes beer, wine, and spirits. The company is best known for its beer brands, including Corona and Modelo. The company owns extensive vineyard land that it uses to produce wine under the Cutrer, Robert Mondavi, and other labels. Citigroup analysts expect Constellation Brands to increase earnings per share by 15% in FY 2019, following a 10% increase in FY 2018. The company has increased EPS in the last four years and has significant growth potential. Citigroup’s $230 price target on Constellation Brands would significantly increase from current levels.
Brown-Forman is a beverage company that produces, markets, and sells spirits, wine, and specialty malted beverages. Its brands include Jack Daniel’s, Southern Comfort, American Whiskey, Canadian Mist, Herradura, and Woodford Reserve. Brown-Forman has increased EPS in five of the last eight years, including a double-digit increase in FY 2018. In addition, the company’s revenue grew by 8% in FY 2018, and Citigroup analysts expect another strong showing in FY 2019, forecasting a 13% increase in EPS. As a result, Citigroup’s $67 price target on Brown-Forman would significantly increase from current levels.
National Beverage (FIZZ)
National Beverage Corporation is a beverage company that produces and distributes nonalcoholic beverages and citrus juices. The company’s core brands include Shasta, Hansen’s Natural, and Bai. National Beverage has increased EPS in five of the last eight years and has grown revenue by an average of 7% per year over the previous decade. The company has made several strategic acquisitions over the last few years, including purchasing Bai, which has been a considerable growth driver. Citigroup analysts expect another substantial EPS increase in FY 2019, forecasting a 16% increase. The stock provides an excellent combination of growth potential and a reasonable valuation relative to its peers.
The Bottom Line
The beverage industry is changing, but it remains a robust industry that will continue to produce some of the best beverages on the planet. Investing in companies that can navigate the changing tides and continue to deliver strong results is a great strategy. The ten beverage stocks listed above are all solid options right now. These beverage stocks are some of the best investment vehicles if you’re looking to hedge your portfolio against volatility.