Coca-Cola, Pepsi, Monster: 5 Beverage Stocks Hedge Funds Are Drinking Up

Coca-Cola Enterprises Inc (NYSE:CCE) came in as the fourth most popular beverage stock loved by hedge funds with 24 filers. Coca-Cola Enterprises was formerly the largest bottler of Coca-Cola products before selling off its North American operations to Coca-Cola. Revenue fell nearly 60% in 2010 following the sale, but rebounded 11% in 2011. At the same time that Coca-Cola Enterprises was selling off its North America operations, it was expanding internationally with the purchase of Coca-Cola’s Norway and Sweden bottling businesses, while securing the right to acquire its un-owned 83% equity stake in German bottling operations. The restructuring plan should be a long-term positive for the bottling company as it gains greater access to overseas markets. Coca-Cola Enterprises also trades at a significant discount to other major bottling peers at 13x earnings and could be considered a value play.

Fomento Economico Mexicano SAB (NYSE:FMX) found itself in fifth with 19 filers. Fomento is a Mexico-based holding company engaged in the beverages industry, with other operations that include convenience stores. The beverage distributor made a key growth move of late, hoping to expand its operations and diversify revenue streams. Fomento recently announced the acquisition of 75% of Mexican drugstore operator Farmacias. Fomento trades at the high end of the industry at 28x, with its forward P/E of 22x putting it more in line with peers. We see Fomento as having the most diverse revenue stream of our five beverage companies listed here.

To recap: the two industry giants, Coca-Cola and Pepsi, provide solid income prospects with robust dividends, but for growth, investors should look toward Monster. Fomento is also an interesting opportunity, with the beverage company planning to continue its expansion into other markets that will provide cross selling opportunities.