12 Best Liquor Stocks to Buy Now

·11 min read

In this article, we will look at the 12 best liquor stocks to buy now. If you want to skip our discussion on the trends in the alcoholic beverage industry and its future outlook, go directly to 5 Best Liquor Stocks to Buy Now.

While most industries were negatively impacted by the COVID-19 pandemic, the liquor industry saw an increase in demand for various products. According to the Distilled Spirits Council, demand for luxury spirits experienced an increase of over 43% YoY in 2021. The growth rate of 2021 was twice as high as the five-year average of the industry.

As per research by marketing analytics firm IWSR, 54% of people bought alcohol for the first time through an online channel during the pandemic. Furthermore, the premixed or ready-to-drink cocktails and drinks segment also observed a significant spike in demand during the last year. The sale of premixed cocktails grew by 42% YoY to $1.6 billion in 2021. Ready-to-drink products have become all the rage in the liquor industry as they saw the second highest consumption in terms of volume in 2021. Leading companies like Anheuser-Busch InBev SA/NV (NYSE:BUD) and Diageo plc (NYSE:DEO) are heavily investing in this segment by making acquisitions as the companies expect the growth trend to continue.

Although the restrictions and lockdowns have eased now, the increase in demand for liquor is expected to sustain. According to Technavio, the market for alcoholic drinks is predicted to increase in value by $393.26 billion between 2021 and 2026, reflecting a compound annual growth rate of 3.23%. Some of the top players in the alcoholic beverage industry are Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and The Boston Beer Company, Inc. (NYSE:SAM).

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Our Methodology

We have looked at the companies’ current standing in the liquor industry, their expansion plans, and the business fundamentals before including them in our list of the 12 best liquor stocks to buy now. The historical financial performances have also been discussed to understand the companies’ strength of operations and develop reasonable future expectations on the basis of that. Furthermore, the analyst ratings have been included to provide support to the investment thesis.

Best Liquor Stocks to Buy Now

12. LVMH Moët Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY)

Number of Hedge Fund Holders: N/A

LVMH Moët Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY) is a French holding company for luxury goods. Wines and Spirits is one of the segments of the company that has leading brands in its portfolio. The segment is the second biggest contributor to the bottom line of the company as it enjoys healthy operating margins. Hennessy is the crown jewel in LVMH’s portfolio. The cognac brand established in 1765 is sold in over 160 countries.

During the first half of this year, the revenue of the company’s Wines & Spirits segment increased by 23% YoY to $3.39 billion. Meanwhile, profit increased by 25% YoY to $1.18 billion. The growth in company margins has been supported by higher demand and price increases in 2022.

LVMH Moët Hennessy - Louis Vuitton, Société Européenne (OTC:LVMUY) is  considered a solid stock to own in recessionary times as the company's primary target market is affluent customers. The elite segment of society is unlikely to drastically cut down on its spending during periods of economic downturn. Furthermore, the diversified nature of the business model allows the company to sustain its overall growth, despite financial setbacks. LVMH saw its annual revenue increase at a CAGR of 10.5% between 2011 to 2021.

11. Willamette Valley Vineyards, Inc. (NASDAQ:WVVI)

Number of Hedge Fund Holders: 2

Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) is a Turner, Oregon-based producer of Pinot Noir along with Chardonnay and Pinot Gris.

The company is diversifying its operations by opening Tasting Rooms with Restaurants. On April 25, Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) opened its first tasting room and restaurant on Lake Oswego. The company has lined up Vancouver, Washington, and Happy Valley, Oregon as the second and third locations for its tasting room and restaurant. Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) is termed “One of America’s Great Pinot Noir Producers,” according to Wine Enthusiast.

Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) posted its Q2 2022 results on August 12. Revenue was recorded at $8.7 million, increasing from $6.24 million in the preceding quarter. To support the execution of its expansion plans, the company announced the appointment of Joe Padilla as the Chief Operating Officer in June 2022. Padilla brings over 30 years of experience in management and is expected to increase the efficiency of operations within the company.

10. Compañía Cervecerías Unidas S.A. (NYSE:CCU)

Number of Hedge Fund Holders: 8

Compañía Cervecerías Unidas S.A. (NYSE:CCU) is Las Condes, Chile-based diversified beverage manufacturer. The company produces alcoholic and non-alcoholic beverages.

Compañía Cervecerías Unidas S.A. (NYSE:CCU) controls nearly 60% of the beer market in Chile and is the bottler for PepsiCo, Inc. (NYSE:PEP) in the country. The company also exports low-price Gato Negro wine to other Latin American countries. Compañía Cervecerías Unidas S.A. (NYSE:CCU) is working towards expanding its operations. The company’s international joint ventures in Columbia recorded double-digit growth in terms of volume during the second quarter of the year. The increase in growth was fueled by higher demand for beer and malt.

Furthermore, Compañía Cervecerías Unidas S.A. (NYSE:CCU) reported an 18% increase in revenue in Q2 2022. Analysts are bullish on the stock’s long-term outlook owing to the management’s strong growth initiatives. Compañía Cervecerías Unidas S.A. (NYSE:CCU) is a high-yield dividend stock and is a great bet on the Chilean brewing industry.

9. Vintage Wine Estates, Inc. (NASDAQ:VWE)

Number of Hedge Fund Holders: 12

Vintage Wine Estates, Inc. (NASDAQ:VWE) is a Santa Rosa, California-based fast-growing family of wineries that went public in June 2021 through a special purpose acquisition company (SPAC) deal.

Vintage Wine Estates, Inc.’s (NASDAQ:VWE) multi-brand portfolio has helped the company gain a competitive edge over its peers. The company’s collaboration with travel and leisure wine is one of its most recent examples of broadening the consumer base. Vintage Wine Estates, Inc.’s (NASDAQ:VWE) omnichannel marketing strategy has also helped increase the company’s wine club memberships in the recent past.

On August 1, Alexandra Davis at Citi maintained a Buy rating on Vintage Wine Estates, Inc. (NASDAQ:VWE) stock with a target price of $9. The analyst believes that the company can balance the successful acquisition strategy with its existing portfolio’s sales growth. Davis added that Vintage Wine Estates, Inc.’s (NASDAQ:VWE) margins would expand further through accretive acquisitions and capital improvements. The company is expected to report Q4 FY22 results on September 28. Analysts anticipate Vintage Wine Estates, Inc. (NASDAQ:VWE) to report revenue and adjusted EPS of $74.23 million and 14 cents, respectively.

Vintage Wine Estates, Inc. (NASDAQ:VWE) was held by 12 hedge funds at the end of Q1 2022.

8. MGP Ingredients, Inc. (NASDAQ:MGPI)

Number of Hedge Fund Holders: 18

MGP Ingredients, Inc. (NASDAQ:MGPI) is an Atchison, Kansas-based producer of bourbon, gin, rye whiskeys, and vodkas.

On August 15, Wells Fargo appreciated MGP Ingredients, Inc.’s (NASDAQ:MGPI) diversified portfolio and the consistent growth in revenue. The investment firm believes MGP Ingredients, Inc. (NASDAQ:MGPI) is in a strong position to exceed guidance this year due to its premiumization strategy.

In a report issued to investors on August 5, Ben Klieve at Lake Street increased the target price for MGP Ingredients, Inc. (NASDAQ:MGPI) from $115 to $125 and reiterated a Buy rating on the stock. The analyst highlighted that the company reported another strong quarterly result that was aided by the strength of the Distillery and Ingredients division. Klieve anticipates that a favorable mix shift towards higher margin offerings along with improved pricing power will aid MGP Ingredients, Inc. (NASDAQ:MGPI) in countering the impact of higher input costs.

In Q2 2022, MGP Ingredients, Inc. (NASDAQ:MGPI) reported revenue and adjusted EPS of $195 million and $1.15, respectively, outperforming the analysts’ forecast of $173 million and 94 cents.

Driehaus Capital was the leading hedge fund investor in MGP Ingredients, Inc. (NASDAQ:MGPI) during Q2 2022.

7. Ambev S.A. (NYSE:ABEV)

Number of Hedge Fund Holders: 18

Ambev S.A. (NYSE:ABEV) is a Sao Paulo, Brazil-based brewing company. The company has operations in 18 countries in South America and the Caribbean.

Ambev S.A. (NYSE:ABEV) is expected to sustain its strong position in the industry during the second half of the year due to a rise in cash transfers to the masses, an increase in travel, and improved weather.

Lucas Ferreira at JPMorgan upgraded Ambev S.A. (NYSE:ABEV) stock from a Neutral to an Overweight rating on July 13 and increased the target price from $2.96 to $3.35. Despite the increase in commodity prices, Ambev S.A. (NYSE:ABEV) has been able to improve its margins due to the company’s strong pricing power. In times of economic uncertainty, analysts are considering Ambev S.A. (NYSE:ABEV) a high-quality stock that can weather inflationary pressures.

Here’s what Broyhill Asset Management said about Ambev S.A. (NYSE:ABEV) in its Q4 2021 investor letter:

“Shares of Ambev struggled to buck the double-digit decline in emerging market indices in the second half of the year. Consensus concerns around commodity cost headwinds certainly didn’t help matters, but beyond short term margin pressures, te business continue to grow their profits as well as their economic moats.

Ambev, its publicly traded subsidiary, enjoys an even stronger local competitive advantage, with nearly two-thirds market share in Brazil, its largest market, and a number one or number two position in each of its other markets. Shares are currently trading more than 50% below the highs reached in 2018 as weak local currencies have weighed on margins (the majority of Ambev’s cost of goods are denominated in dollars) and macro concerns have weighed on the region, which has suffered years of capital outflows. Despite these headwinds, Ambev reported record volume in every quarter last year, months after reporting its lowest volume in history during the pandemic. Should capital decide to return to Brazil and emerging markets (more on this later), we’d expect Ambev to be a primary beneficiary as the stock remains one of the largest, most profitable, and most liquid names in the index, operating in one of the consumer industry’s largest and most relevant sectors.”

As of Q1 2022, Ambev S.A. (NYSE:ABEV) was held by 18 hedge funds.

6. Anheuser-Busch InBev SA/NV (NYSE:BUD)

Number of Hedge Fund Holders: 20

Anheuser-Busch InBev SA/NV (NYSE:BUD) is a Belgian-American brewing and drink company with a global footprint. The company has the distinction of being the biggest brewer of alcoholic products in the world and has over 500 beer brands under its portfolio.

According to analysts, Anheuser-Busch InBev SA/NV (NYSE:BUD) controls nearly one-third of the global beer market and is nearly double the size of its nearest competitor. In a report issued to investors on August 1, Laurence Whyatt at Barclays increased the target price for Anheuser-Busch InBev SA/NV (NYSE:BUD) from $78.95 to $79.97 and maintained an Overweight rating on the stock.

The broad product portfolio gives Anheuser-Busch InBev SA/NV (NYSE:BUD) a competitive advantage against its peers as it caters to every market and uses cost synergies to stay ahead of its competitors. Citadel Investment Group increased its stake in Anheuser-Busch InBev SA/NV (NYSE:BUD) by over 2000% in Q2 2022.

Broyhill Asset Management shared its outlook on Anheuser-Busch InBev SA/NV (NYSE:BUD) in its Q4 2021 investor letter. Here’s what the firm said:

“Shares of ABI struggled to buck the double-digit decline in emerging market indices in the second half of the year. Consensus concerns around commodity cost headwinds certainly didn’t help matters, but beyond short term margin pressures, both businesses continue to grow their profits as well as their economic moats. ABI controls over a quarter of the nearly $600 billion global beer market, based on Euromonitor data, and remains well positioned for a rebound in post-pandemic industry sales.”

In addition to Anheuser-Busch InBev SA/NV (NYSE:BUD), Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and The Boston Beer Company, Inc. (NYSE:SAM) are also amongst our list of the 12 best liquor stocks to buy now.

 

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Disclose. None. 12 Best Liquor Stocks to Buy Now is originally published on Insider Monkey.