In this article, we will take a look at the 10 best whiskey and alcohol stocks to buy in 2021.
The year 2020 has been transformational for the whiskey and alcohol industry. Due to the lockdown restrictions put in place to contain the COVID-19 pandemic, bars and restaurants, traditionally the go-to places for consumption of alcohol, were shut down. As a result, the home consumption of beverages increased, and in order to survive the hit in sales, many firms turned their attention to online marketing. According to research by the International Wines and Spirits Record, 44% of alcohol consumers on the internet only started buying alcohol online in 2020.
The investments made in ecommerce are likely to remain critical drivers of growth for beverage makers well into 2021. For example, Diageo plc (NYSE: DEO), one of the largest beverage firms in the world, was able to continue with a policy of increasing the annual dividend payment for shareholders because online sales helped the company weather the impact of the coronavirus crisis. In 2020, Diageo plc (NYSE: DEO) reported a 2% increase in sales in the UK, a 30% increase in off-trade drinking, and a massive boost in web-based beverage purchases.
Similarly, Brown-Forman Corporation (NYSE: BF-B), another giant of the beverage industry, redesigned a website previously dedicated to alcoholic products and included home entertainment ideas for the lockdown on the webpage, directing buyers to purchase items from the company to put these ideas into practice. Brown-Forman Corporation (NYSE: BF-B) also reported a 1% increase in net sales in the third fiscal quarter results posted in January, as well as a year-to-date operating income increase of 10% to $998 million.
In addition to the sales boost online, there is also reason to be optimistic about breweries as the vaccine rollout allows for bars to reopen. In April, The Boston Beer Company, Inc. (NYSE: SAM), in earnings results for the first three months of 2021, posted a revenue of more than $545 million, up more than 64% compared to the same period in 2020. Net income over the first quarter also increased a whopping 250% year-on-year to $65 million. The Boston Beer Company, Inc. (NYSE: SAM) has seen share price climb to new highs based on these numbers.
Changing consumer attitudes towards alcohol and the increased sales of ready-to-drink products are likely to shape the future trends for the alcohol industry. Within the ready-to-drink sector, innovation in base drinks, the exploration of local flavors, and the demand for premium alcoholic products are some key areas that investors might want to keep an eye on. Consumer aspirations for no-alcohol or low-alcohol drinks are also increasing, with young people playing the role of disruptors for the brewery market.
This disruptive shockwave is not limited to drinking habits but stretches beyond consumer staples to as far as the finance world. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of 10 best whiskey and alcohol stocks to buy in 2021.
Best Whiskey and Alcohol Stocks to Buy
10. Ambev S.A. (NYSE: ABEV)
Number of Hedge Fund Holders: 18
Ambev S.A. (NYSE: ABEV) is a Brazil-based brewing company founded in 1999. It is placed tenth on our list of 10 best whiskey and alcohol stocks to buy in 2021. Ambev S.A. (NYSE: ABEV) makes and sells beer, carbonated drinks, and non-alcoholic beverages primarily in South America and North America. Some of the brands it owns include Skol, Brahma, Antarctica, Brahva, Brahva Gold, Extra, Budweiser, Bud Light, Stella Artois, Corona, Modelo Especial, and Beck, among others. Ambev S.A. (NYSE: ABEV) has returned more than 50% to investors over the past year.
On May 6, Ambev S.A. (NYSE: ABEV) posted a revenue of R$16.6 billion, up more than 32% compared to the same period last year. It also reported a net income of R$2.73 billion, beating market forecasts by close to R$0.4 billion.
At the end of the fourth quarter of 2020, 18 hedge funds in the database of Insider Monkey held stakes worth $306 million in the firm, down from 21 the preceding quarter worth $347 million.
9. Eastside Distilling, Inc. (NASDAQ: EAST)
Number of Hedge Fund Holders: 2
Eastside Distilling, Inc. (NASDAQ: EAST) is an Oregon-based company that sells various types of coffee and alcoholic beverages. It was founded in 2004 and is placed ninth on our list of 10 best whiskey and alcohol stocks to buy in 2021. Some of the brands it owns include Hue-Hue Coffee Rum, Azuñia Tequila, Portland Potato Vodka, and Burnside Whiskey brand. Eastside Distilling, Inc. (NASDAQ: EAST) stock has gained more than 30% since the start of the year as bars and cafes reopen and boost sales after a disappointing 2020.
In late March, Eastside Distilling, Inc. (NASDAQ: EAST) posted earnings for the last three months of 2020, reporting a revenue of $2.32 million, a decrease of close to 17% compared to the revenue from the same period in the previous year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in the firm with 472,225 shares worth more than $604,000.
8. MGP Ingredients, Inc. (NASDAQ: MGPI)
Number of Hedge Fund Holders: 13
MGP Ingredients, Inc. (NASDAQ: MGPI) is a Kansas-based food and beverage company. It is ranked eighth on our list of 10 best whiskey and alcohol stocks to buy in 2021 and was founded in 1941. MGP Ingredients, Inc. (NASDAQ: MGPI) has returned more than 70% to investors over the course of the past twelve months. The company markets bourbon, whiskey, vodka, and gin, among other alcoholic drinks. It also has stakes in the specialty wheat protein and starch food businesses. It has operations in the United States, Japan, Thailand, Mexico, and Canada.
Like Diageo plc (NYSE: DEO), Brown-Forman Corporation (NYSE: BF-B) and The Boston Beer Company, Inc. (NYSE: SAM), MGPI is one of the best whiskey and alcohol stocks to buy now.
On May 5, MGP Ingredients, Inc. (NASDAQ: MGPI) posted a revenue of $108 million for the first three months of 2021, up more than 9% year-on-year and beating market estimates by over $10 million. The earnings per share for the period were $1.01.
At the end of the fourth quarter of 2020, 13 hedge funds in the database of Insider Monkey held stakes worth $27 million in MGP Ingredients, Inc. (NASDAQ: MGPI), up from 11 in the preceding quarter worth $19 million.
7. Willamette Valley Vineyards, Inc. (NASDAQ: WVVI)
Number of Hedge Fund Holders: 1
Willamette Valley Vineyards, Inc. (NASDAQ: WVVI) is an Oregon-based winery founded in 1983. It is placed seventh on our list of 10 best whiskey and alcohol stocks to buy in 2021. Some of the famous brands it owns include Pinot Noir, Chardonnay, Pinot Gris, Pinot Blanc, Rose, Methode Champenoise Brut, and Riesling, among others. Willamette stock has returned more than 160% to investors over the past year. The operations of the firm, primarily related to wines, are spread over 1,018 acres of land.
In November last year, Willamette Valley Vineyards, Inc. (NASDAQ: WVVI) reported a revenue of close to $7 million for the third quarter of 2020, up 2.4% compared to the same period in the previous year. It also posted earnings per share of $0.13 for the period.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in the firm with 126,047 shares worth more than $803,000.
6. Anheuser-Busch InBev SA/NV (NYSE: BUD)
Number of Hedge Fund Holders: 18
Anheuser-Busch InBev SA/NV (NYSE: BUD) is a Missouri-based brewing company. It was founded in 1852 and is ranked sixth on our list of 10 best whiskey and alcohol stocks to buy in 2021. The company stock has offered more than 75% in returns to investors over the past twelve months. The firm owns more than 500 beer brands, including famous ones like Budweiser, Corona, Stella Artois, Beck’s, Hoegaarden, Leffe, Michelob Ultra, and Aguila, among others. It has a market cap of over $147 billion.
On May 10, the Bank of America gave credit to Anheuser-Busch InBev SA/NV (NYSE: BUD) for strong quarterly results in 2021, but warned investors of margin pressure and valuation as the brewing stock took a breather after a ten-week record rally.
At the end of the fourth quarter of 2020, 18 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Anheuser-Busch InBev SA/NV (NYSE: BUD), the same as in the previous quarter worth $958 million.
In its Q1 2020 investor letter, Broyhill Asset Management, a boutique investment firm based in North Carolina, highlighted a few stocks and Anheuser-Busch InBev SA/NV (NYSE: BUD) was one of them. The comments show that like Diageo plc (NYSE: DEO), Brown-Forman Corporation (NYSE: BF-B) and The Boston Beer Company, Inc. (NYSE: SAM), BUD is one of the best whiskey and alcohol stocks to buy in 2021. Here is what the fund said:
“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
5. The Boston Beer Company, Inc. (NYSE: SAM)
Number of Hedge Fund Holders: 35
The Boston Beer Company, Inc. (NYSE: SAM) is a Massachusetts-based brewery founded in 1984. It is placed fifth on our list of 10 best whiskey and alcohol stocks to buy in 2021. The company owns the Samuel Adams Boston Lager brand, as well as others like Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard, Dogfish Head, and Angel City, among others. Boston Beer has returned more than 130% to investors over the past year. The firm has operations in North America, South America, Australia, Asia, and Central America.
On April 26, investment advisory Citi downgraded The Boston Beer Company, Inc. (NYSE: SAM) to Neutral from Buy while boosting the price target to $1,395. The firm expects 45% growth in revenue for the brewery in this fiscal year, which Citi terms the peak of its top line growth rate given market competition.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in the firm with 373,500 shares worth more than $371 million.
4. Constellation Brands, Inc. (NYSE: STZ)
Number of Hedge Fund Holders: 58
Constellation Brands, Inc. (NYSE: STZ) is a New York-based company that makes and sells beer, wine, and spirits. The firm is one of the largest beer import companies in the US and was founded in 1945. It is ranked fourth on our list of 10 best whiskey and alcohol stocks to buy in 2021. The firm owns the Corona, not to be confused with the virus of the same name, and Modelo brands. The stock has offered investors 45% in returns over the past year. The firm has a market cap of more than $46 billion.
Investment bank Morgan Stanley on April 8 maintained an Overweight rating on Constellation Brands, Inc. (NYSE: STZ) stock despite the beer maker reporting a 6.4% beer depletion growth in fiscal quarter four and posting earnings per share guidance that fell short of market expectations.
At the end of the fourth quarter of 2020, 58 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in the firm, up from 53 in the preceding quarter worth $2.1 billion.
3. Brown-Forman Corporation (NYSE: BF-B)
Number of Hedge Fund Holders: 29
Brown-Forman Corporation (NYSE: BF-B) is a Kentucky-based company that makes and sells alcohol. It is placed third on our list of 10 best whiskey and alcohol stocks to buy in 2021. The firm owns the Jack Daniel’s, Woodford Reserve, Canadian Mist, GlenDronach, and BenRiach brands, and operates globally. Brown-Forman stock has returned more than 16% to investors over the course of the past twelve months despite the pandemic affecting sales of wines, cocktails, vodkas, tequilas, champagnes, and other products.
Investment advisory Cowen on March 4 gave Brown-Forman Corporation (NYSE: BF-B) an Outperform rating with a price target of $100 following a strong quarterly earnings report released by the beverage maker.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in the firm with 10.2 million shares worth more than $814 million.
2. Molson Coors Beverage Company (NYSE: TAP)
Number of Hedge Fund Holders: 39
Molson Coors Beverage Company (NYSE: TAP) is an Illinois-based multinational drink and brewery firm founded in 1873. It is placed second on our list of 10 best whiskey and alcohol stocks to buy in 2021. The firm has operations in the US, Canada, and some European countries. Molson stock has returned more than 45% to investors in the past year. The company has a market cap of more than $12 billion and posted annual revenue of more than $9.5 billion in 2020, slightly below $10.5 billion reported in 2019.
On April 29, Molson Coors Beverage Company (NYSE: TAP) posted quarterly earnings for the first three months of 2021, reporting a revenue of more than $1.9 billion, beating market estimates by close to $30 million.
At the end of the fourth quarter of 2020, 39 hedge funds in the database of Insider Monkey held stakes worth $386 million in the firm, up from 33 in the preceding quarter worth $316 million.
In its Q3 2020 investor letter, Argosy Investors highlighted a few stocks and Molson Coors Beverage Company (NYSE: TAP) was one of them. Here is what the fund said:
“I purchased shares of Molson Coors (TAP) during the third quarter, and this mid-tier brewer is valued attractively at less than 8x EBITDA, at the low end of historical multiples.
I do not expect a lot of growth from this investment, but it is challenging to find fairly-priced resilient businesses in the current environment, and if there is one thing I can count on is that people will drink beer, especially during a pandemic. The biggest risk is obviously that they may choose to drink other types of beer, specifically craft beers. While the company’s balance sheet is a little stretched, I believe the company is focused on reducing debt, most noticeably in their decision to suspend their dividend for 2020. I do not believe this investment will provide explosive returns for us, but I believe it is an attractive alternative to cash. The company can pay down significant amounts of debt fairly quickly and deliver reasonable equity returns by doing so.
Additionally, the company recently got into the hard seltzer game, specifically through their Vizzy and Coors Seltzer products. The author took the opportunity to sample these products over the Labor Day holiday, and came away impressed with the decent flavors, and subsequent conversations with millennials and particularly millennial females who had tried the product reflected positive early feedback for these offerings. Finally, Molson Coors announced a partnership with Coca-Cola to develop their Topo Chico hard seltzer product. The hard seltzer category is growing mid-teens percent annually right now, and I believe Molson Coors has enough irons in the fire here to make a decent impact on their top and bottom lines. Any amount of unexpected growth from these products would be a cherry on top to our investment case.”
1. Diageo plc (NYSE: DEO)
Number of Hedge Fund Holders: 23
Diageo plc (NYSE: DEO) is a London-based alcohol-maker founded in 1997. It is ranked first on our list of 10 best whiskey and alcohol stocks to buy in 2021. The company has operations in more than 180 countries and is one of the largest distilleries in the world with a market cap over $107 billion. Diageo stock has returned more than 31% to investors in the past year. Some of the famous brands owned by the firm include Johnnie Walker, Smirnoff, Baileys, Captain Morgan, Tanqueray, and Guinness, among others.
Diageo plc (NYSE: DEO) reported earnings for the fourth quarter of 2020 in January this year, posting a revenue of £6.87 billion, down 4.6% compared to the same period last year but beating market predictions by £40 million.
Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Markel Gayner Asset Management is a leading shareholder in the firm with 1.3 million shares worth more than $214 million.
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Disclosure: None. 10 Best Whiskey and Alcohol Stocks to Buy in 2021 is originally published on Insider Monkey.
