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Why Molson Coors Beverage (TAP) Stock is a Compelling Investment Case

Argosy Investors recently released its Q3 2020 Investor Letter, a copy of which you can download here. Year-to-date performance was 15.5% in select accounts. The S&P 500 by comparison returned 5.5%. You should check out Argosy Investors’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Argosy Investors highlighted a few stocks and Molson Coors Beverage Co (NYSE:TAP) is one of them. Molson Coors Beverage Co (NYSE:TAP) is a multinational drink and brewing company. Year-to-date, Molson Coors Beverage Co (NYSE:TAP) stock lost 34% and on October 15th it had a closing price of $35.57. Here is what Argosy Investors 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.”

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Valentyn Volkov/Shutterstock.com

Earlier this week, we published an article revealing that McLain Capital is bullish on Molson Coors Beverage Co (NYSE:TAP) stock. The investment firm believes that the stock has massive upside potential.

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 believe in 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 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.