Coors, Anheuser-Busch Among The 5 Alcohol Stocks Hedge Funds are Getting Drunk On

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Anheuser-Busch InBev NV (NYSE:BUD) came in at second with 27 filers. Anheuser-Busch trades at a premium to top peer Molson at 19x trailing earnings, but has some of the better prospects.  Anheuser-Busch recently purchased its remaining stake in Modelo, which should be a driver of the beer company’s best-in-industry long term expected EPS growth rate of 13% annually. In addition to Anheuser-Busch’s growth opportunities, investors also receive a dividend that yields around 2%.

Constellation Brands, Inc. (NYSE:STZ) beat out Anheuser for first with 29 filers. Constellation has a diverse product portfolio of wine, beer and spirits. Constellation trades at a steep discount to its major peer class at only 16x trailing earnings and 13x forward earnings, after seeing FY 2012 revenue drop 20% due to divestures of various wine and beer businesses. Constellation recently acquired a stake in the Crown Imports joint venture from Modelo for exclusive rights to distribute Corona-branded beer in the U.S. The move is a big one for diversification, and it gives the company a broader product mix away from being wine-heavy, so to speak. The cheapness of this stock on a P/E basis and its solid long-term growth rate make it solid ‘growth at a reasonable price’ pick with a PEG of 1.0. Check out our latest earnings analysis of Constellation Brands.

We believe that the alcoholic beverage industry has held up well and will continue to do so over the interim, with the potential for improving sales as unemployment declines. The beverage companies with more access to the wine and spirit markets may perform better as the industry sees a fundamental shift away from beer, but the top hedge fund pick might be investors’ best bet – Constellation Brands – given its product mix. For a longer look at Constellation, continue reading its profile page at Insider Monkey.

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