5 Best Beverage Stocks To Buy Now

4. Keurig Dr Pepper Inc

Keurig Dr Pepper Inc (NASDAQ: KDP) ranks 3rd on the list of 10 best beverage stocks to buy now. Keurig is a Texas-based beverage company that makes iced tea, juices, hard seltzer products and coffee products. In December 2020, UBS analyst Sean King initiated the coverage of Keurig Dr Pepper with a Buy rating. The analyst believes that the stock has a major upside potential and gave a price target of $32. For the third quarter, the company reported an adjust EPS of $0.39, above the analysts’ estimate of $0.37.

Hedge funds interest in Keurig Dr Pepper jumped significantly in the third quarter. A total of 41 hedge funds held stakes in the company by the end of the quarter, up from just 29 funds in the previous quarter. The total worth of these stakes is over $1.21 billion.  Natixis Global Asset Management’s Harris Associates is leading these hedge funds, with a stake worth $485.05 million. Oakmark Funds talked about KDP in its 2020 Q3 investor letter:

“Keurig Dr Pepper is one of North America’s leading beverage companies and commands dominant positions in single-serve coffee and flavored sodas. We believe single-serve coffee pods will capture almost all of the incremental growth in at-home coffee consumption because coffee drinkers increasingly prefer K-Cups over drip brewing due to its greater convenience, quality, variety and value. Keurig’s competitive advantages (low-cost production, the largest installed base of brewers, exclusive brand partnerships) allow it to collect a toll on most pods sold in North America. The company’s soda franchises remain highly profitable, and we do not expect health-related concerns about sugar to materially impact consumption trends. We believe that Keurig’s brands should deliver steady growth, consistent market share gains and significant excess cash. We think the company is an above-average business trading at a meaningful discount to the broader market, its beverage peers and historical private market transactions.”