Five US beverage stocks to explore ahead of the New Year

By - Rupam Roy


  • Net sales of The Vita Coco Company (COCO) rose seven per cent YoY in Q3 FY22.
  • Constellation Brands would report its Q3 FY23 earnings results on January 5.
  • Net sales of Monster Beverage Corporation (MNST) jumped over 15 per cent YoY in Q3 FY22.

The beverage sector is generally considered timeless and recession-proof. The sector comprises companies that produce soft drinks like energy drinks, carbonated drinks, etc., and companies operating breweries and distilleries.

The constant demand for beverages, be it coffee, tea, wine, beer, etc., has historically helped the beverage segment to be on the investors' radar. Many companies have grown into valuable global brands from the sector due to the reliable demand for their products.

However, some consider the segment as a "sin sector", given the health and other related impacts it carries. But despite the criticism it received, a significant part of global consumers favors the sector.

It is a part of the consumer staples sector that people tend to spend on irrespective of the economy's health. Bottled or canned products are sold through several mediums like supermarket stores, restaurants, bars, etc.

While the COVID-19 pandemic has hit almost all the major market sectors, it seemed to be a boon to the beverage sector, especially the beer and other alcoholic segments. Consumers' demands for snacks and beverages had noted a significant increase during the pandemic when people had to stay at home.

In addition, the pandemic has also bolstered gains in the e-commerce beverage segment, as people shopped more through online channels during the period. So, today we will be exploring five beverage stocks, which include The Vita Coco Company, Inc. (NASDAQ: COCO), MGP Ingredients, Inc. (NASDAQ: MGPI), Molson Coors Beverage Company (NYSE: TAP), Constellation Brands, Inc. (NYSE: STZ), and Monster Beverage Corporation (NASDAQ: MNST), and their recent performances.

The Vita Coco Company, Inc. (NASDAQ: COCO)

The Vita Coco Company is a healthy beverage production firm with a market cap of US$ 702.4 million. The company's stock, which produces and sells coconut water, oil, milk, and other related products, ticked up over 12 per cent YTD.

However, in the ongoing quarter through Friday, December 2, the COCO stock surged about 10 per cent. Meanwhile, the stock closed at US$ 12.89, up over 2 per cent from its previous close.

The Vita Coco Company Inc's net sales ticked seven per cent YoY to US$ 124 million in Q3 FY22, and its net income totaled US$ 7 million, representing an improvement of over 450 basis points from the previous quarter.

The company said that the surge in its revenue was driven by 14 per cent growth in its Coconut Water segment.

MGP Ingredients, Inc. (NASDAQ: MGPI)

Another popular beverage company that sells branded spirits, MGP Ingredients holds a P/E ratio of 23.21. The firm's stock, which produces and distributes branded spirits, distilled spirits, and other related items, rose over 45 per cent YTD and about 47 per cent YoY.

The MGPI stock went up over 16 per cent QTD through Friday, December 2, when it closed at US$ 123, and it was at its 52-week high of US$ 125.74 on November 25, 2022.

In the latest quarter, MGP Ingredients Inc's sales rose 14 per cent YoY to US$ 201.2 million, while its net income decreased "slightly" to US$ 23.63 million from US$ 23.67 million in Q3 FY21. The jump in the company's sales was driven by the record third-quarter sales across all of its business segments, the firm said.

Molson Coors Beverage Company (NYSE: TAP)

The major American-Canadian drink and brewing company, Molson Coors Beverage Company, holds a dividend yield of 2.76 per cent. The company's stock, which produces and sells beer, and other beverage products, rose around 19 per cent YTD and about 25 per cent YoY.

The TAP stock added about 15 per cent QTD through Friday, December 2, when it closed at US$ 55.57. On November 10, the Chicago, Illinois-based drink and brewing firm announced a dividend of US$ 0.38 per share on its Class A and Class B common stock, which would be payable on December 15.

Molson Coors Beverage Company's sales rose four per cent YoY on a reported basis to US$ 2.93 billion in Q3 FY22, and its US GAAP income before taxes fell 43.2 per cent YoY to US$ 273 million.

Constellation Brands, Inc. (NYSE: STZ)

The leading multinational beverage and drink company Constellation Brands Inc's dividend yield was 1.24 per cent. The firm's stock, which sells beer, wine, and other spirits, gained over three per cent YTD and about 16 per cent YoY.

The Victor, New York-based beverage firm would report its Q3 FY23 earnings results on January 5, 2023, before the opening of the US markets. Meanwhile, in Q2 FY23, Constellation Brands Inc's net sales jumped 12 per cent YoY to US$ 2.65 billion, and its operating income surged 10 per cent YoY to US$ 813 million.

Monster Beverage Corporation (NASDAQ: MNST)

The popular Corona, California-based beverage firm Monster Beverage Corporation's market cap was US$ 54.28 billion. The beverage firm's stock, which primarily produces and sells energy drinks, rose around eight per cent YTD and about 27 per cent YoY.

The MNST stock added about 19 per cent in the running quarter through Friday, December 2, and it was at its 52-week high of US$ 104.485 on November 28, 2022.

Meanwhile, in Q3 FY22, Monster Beverage Corporation's net sales rose 15.2 per cent YoY to US$ 1.62 billion, and its net income ticked down 4.4 per cent YoY to US$ 322.4 million.

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Bottom line:

The rising interest rates have weighed on the consumers' budget, which has triggered recession concerns among the market participants in recent days. Having said that, many investors ran for the hills while others explored opportunities in safer assets.

However, the recession threat appeared to be subsided after the recent GDP data showed that the US economy advanced at a 2.9 per cent rate in the third quarter, after two straight quarters of decline.

Still, the layoffs from the big companies and the tight labor market are weighing on the consumers' sentiments. In addition, the sector might gain attention from investors ahead of events like New Year, Christmas, etc., when people tend to spend more on beverages and food items.

The S&P 500 Food Beverage & Tobacco Index surged 15 per cent in the current quarter through December 1, and on a YTD basis, it jumped over seven per cent.