Zacks Investment Ideas feature highlights: Anheuser Busch InBev, Constellation Brands and Boston Beer
CHICAGO, July 29, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Anheuser Busch InBev (NYSE:BUD-Free Report), Constellation Brands (NYSE:STZ-Free Report) and Boston Beer Company (NYSE:SAM-Free Report).
Beer Money Stocks
There's something about an ice cold beer on a hot summer day. The effervescence, the cool bubbles, the refreshing taste. So there I was this weekend having just cut the grass, drenched with sweat, thinking to myself "I sure could use a cold one." I went to the fridge, cracked one open, sat on the stoop and took in the summer day. Then I started to think about how much beer is sold in a given day in Chicago. Then extrapolated that to the state, the country, the world. Somebody has got to be making a mint.
I fired up my computer, logged onto Zacks.com and started searching for stocks that could earn me some beer money. I found several companies in the industry that are Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) stocks. In fact, the alcoholic beverage industry is in the top 11% of our Zacks Industry Rank. What started off as a good idea turned out to be a great idea.
This BUD's For You
Boasting a Zacks Rank #2 (Buy) is Anheuser Busch InBev (NYSE:BUD-Free Report). You may remember when the European company Inbev bought the St. Louis brewer a few years back. Among Anheuser's brands are Busch, Budweiser, Stella Artois and Becks.
Analysts have been very bullish on BUD recently. In the last 30 days two analysts have upped their estimates for the current year and next year, pushing consensus up from $5.14 to $5.19 per share for this year. Hopefully BUD can avoid a miss like last quarter. Earnings came in at 87 cents versus $1.01 analysts were expecting.
After hitting a fresh 52 week high June 20th, BUD has sold off a bit. Recently the stock dipped below its 40 day moving average, indicating the onset of a downtrend. Stochastics are showing BUD in extreme oversold territory. Earnings are coming up later this week and may be the catalyst for a reversal of the short term trend.
Life's A Beach
Lime or no lime is the question when ordering one of Constellation Brands (NYSE:STZ-Free Report) best-selling beers, Corona. The company is the largest multi-category alcohol supplier in the US. Constellation is a Zacks Rank #1 (Strong Buy).
A big reason for the ranking is five analysts raised their earnings estimates for the current year and four have done so for next year. This pushed consensus up from $4.12 to $4.26 for this year and up from $4.61 to $4.78 for next year. This is likely a conservative estimate as well as STZ has surprised to the upside four quarters in a row, beating the street by 12 cents on average.
Brands peaked on July 2nd and has slowly sold off since. Just like BUD, STZ recently dropped below its 40 day moving average indicating a fresh downtrend. Stochastics are also extremely oversold on this stock as well. Investors looking to cash in should wait for a small bounce before jumping on board.
Play It Again, SAM
One of the tastier brands is Sam Adams from Boston Beer Company (NYSE:SAM-Free Report). Sam Adams is famous for its commercials featuring its eccentric CEO. SAM currently is a Zacks Rank #1 (Strong Buy). The stock sort of flies under the radar as average daily volume is about 60,000 shares.
Analysts have raised guidance for the current year as well as next year. Consensus jumped from $7.35 to $8 for next year and from $6.24 to $6.33 for this year. Over the last several years the company has achieved significant earnings growth.
The stock has been somewhat of a rollercoaster ride for investors as of late. SAM got up to nearly $250 in March before beginning a downtrend that took the stock all the way down to $208 in May. Since then there's been another leg up followed by a sharp drop. Just like the other two stocks SAM has just dipped below its 40 day moving average and has stochastics in extreme oversold territory. With earnings around the corner this stock should wake up from its doldrums.
Zacks Rank
Individual investors should try to leverage the Zacks Rank. It will help you know when earnings estimates are moving higher and that can lead to better investment performance. IPO's will tend to trade for 60 days before the underwriters can initiate research coverage on them, so a Zacks Rank is at least 60 days out. That is such an important factor that it cannot be understated. The stocks that will outperform will more times than not have a high rank early on.
As much as you want to get in on the next best thing, you really want to avoid the stock that just went public and is now headed for the woodshed. The gains you make on a gamble are one thing, but the losses that can come from a "broken stock" or one that "shouldn't have gone public" can be immense. They say money won is twice as sweet, but trust me when I tell you that lost money due to impatience and stupidity is 10x as disgusting.
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