Is Molson Coors Beverage (TAP) a Smart Long-term Buy?

McLain Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of -6.3% for the quarter (net of fees), underperforming its benchmark, the S&P 500 Index which returned 8.93% in the same quarter. However, you should check out McLain Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners this year.

In the said letter, McLain Capital highlighted a few stocks and Molson Coors Beverage Co (NYSE:TAP) is one of them. Molson Coors Beverage Co (NYSE:TAP) is a multinational brewing company. Year-to-date, Molson Coors Beverage Co (NYSE:TAP) stock lost 34.3% and on October 13th it had a closing price of $35.34. Here is what McLain Capital said:

“Molson Coors (TAP) is a high quality business that generates a strong $1.5bln in normalized annual free cash flow and $2.3bln in TTM EBITDA on a mere $4.7bln in net tangible assets and negative NWC needs. With a TEV of $15.4bln and market cap of $7.2bln, TAP is valued at 6.7x EV/EBITDA & provides 21% free cash flow yield – dirt cheap for a high ROIC, acyclical consumer staple business. As a comp to TAP, Brown-Forman, with a similar low-single-digits sort of growth profile as Molson Coors, trades at a rich 30x EBITDA multiple. If Molson Coors was valued at a mere half of the 30x multiple at which the market values Brown-Forman, TAP stock would be trade $120/share, nearly 4x current its current level of $33/share.”

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Earlier this month, we published an article revealing that Molson Coors Beverage Co (NYSE:TAP) stock has underperformed the S&P 500 Index in the trailing one year period.

In Q2 2020, the number of bullish hedge fund positions on Molson Coors Beverage Co (NYSE:TAP) stock increased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Molson Coors’s growth potential. Our calculations showed that Molson Coors Beverage Co (NYSE:TAP) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.