Drink Up: Investing in Wine and Spirits
Marie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
My last blog post about beer, available here, got me thinking about other options for investing in companies that manufacture and/or distribute beer, wine and liquor. Not surprisingly, most vineyards, breweries and distilleries are privately owned, however there are some options for investors to consider. Like beer, wine and spirits are good for all occasions whether sad or joyous, so these companies can be good, solid, long-term investments.
Brown-Forman Corporation (NYSE: BF-B)
Headquartered in Louisville, Kentucky, Brown-Forman Corporation actually trades under NYSE:BF-B and NYSE BF-A. Since BF-A is thinly traded, voting stock, I focused on the non-voting BF-B stock. Brown-Forman has several brands under its umbrella including Southern Comfort and Canadian Mist as well as Finlandia Vodka, but they are best known for the Jack Daniels line of whiskeys. Recently, they've been heavily marketing Gentleman Jack, their foray into the premium whiskey market with their flagship brand. Brown-Forman has a market cap of just over 15 billion and an earnings per share of 26.21. Their earnings per share are $2.70 and they have a stable beta of .46. Since they also pay dividends Brown-Forman is a strong choice for anyone's portfolio.
Beam, Inc. (NYSE: BEAM)
Based in Deerfield, Illinois, Beam Inc. is a relatively new company with very old brands under its name. Beam, Inc. was formed in 2011 when Fortune Brands holding company sold off its other product lines to focus on their beverage products. Beam owns many well known liquor brands including Maker's Mark, Knob Creek, Gilbey's, Canadian Club, and, of course, Jim Beam. Despite a snafu earlier this year when Maker's Mark announced it would be reducing its alcohol content to an outraged drinking public, Beam has a price to earnings ratio of 25.91 and a beta of 1.01. With a market cap of just under 10 billion and earnings per share of $2.38 as well as dividends Beam, Inc. is another good choice for a long term investment portfolio. I probably wouldn't be so sure of that if they hadn't reversed their decision on Maker's Mark and stuck with the original (perfect) formula.
Constellation Brands, Inc. (NYSE: STZ)
Founded in 1945, this Victor, New York based company is the largest wine producer in the world. Poised to get all the US rights to Mexico's Modelo beer brands including Corona Extra and Corona Light along with its acquisition of Crown Imports, Constellation Brands will also be a tremendous player in the beer industry as America's third largest brewer. With a market cap of over 8.5 billion, earnings per share of $2.11 and price to earnings ratio of 22.20, Constellation Brands is definitely a company to watch. Unfortunately, they don't pay dividends and their beta of 1.21 is less stable than the companies mentioned above.
Beam, Inc. and Brown-Forman pay dividends, which always makes me smile favorably on a company. However, Constellation brands has had a strong mostly climbing stock chart for a decade, so the moral of the story (if there can be a moral in a story about alcohol) is that booze is good for the bottom line provided you're investing in it more than you're drinking it.
Marie Flanigan has no position in any stocks mentioned. The Motley Fool recommends Beam. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!