In this article, we will discuss the 10 best alcohol stocks to buy now.
Alcohol has been part and parcel of our everyday lives since time immemorial. Whether it’s a Sunday brunch, a Saturday night at the club, or a Friday night with a few co-workers, the opportunities to take a drink are endless and engrained in the fabric of many facets of society.
The Global Alcohol Industry:
In 2019, the global alcohol consumption, measured in liters of pure alcohol per person of 15 years of age or older, was 5.5 liters, which is a 4.7% relative decrease from 5.7 liters in 2010. As we mentioned in our article – 20 Most Consumed Alcohols in the World – the global alcoholic beverages market size was valued at $1.62 trillion in 2021, and is projected to reach $2 trillion by 2031, with a CAGR of 2.2% during the forecast period.
The market is likely to be driven by the increasing global young-adult demographic, coupled with high disposable income and consumer demand for premium/super-premium products. Globally, beer drives the market for alcoholic beverages. Regionally, North America and Asia-Pacific are expected to dominate the market during the forecast period.
Resilience of the Beverage Alcohol Industry:
As reported by Forbes, an analysis by Goldman Sachs has revealed that beer and spirits volumes in the American market have shown little correlation with economic growth. Their sales are more related to the general trends of alcohol consumption per capita rather than the general state of the economy. This is because beer and spirits are often seen as affordable luxuries or even staples.
Similarly, a Cambridge University study focused on business cycles and alcohol consumption across 24 countries over more than 50 years also found no symmetric reduction in beer and spirits consumption during recessions. The decreasing levels of average per capita income lead to very small changes in gross alcohol, wine, and beer consumption. In fact, the surge in unemployment during recessions could instead trigger an increase in the average alcohol intake. Moreover, it was also revealed that those who enjoy drinking tend to drink a lot more during the good times.
However, during times of economic difficulty, consumers tend to drink more at home as it is cheaper than hitting the bars. So, while on-premise businesses suffer a decline in sales, liquor stores and online alcohol retailers tend to profit heavily.
Americans drank more alcohol also during the pandemic and this was reflected in the resultant imposts collected by the national kitty. Alcohol tax revenues collected by the U.S. Treasury Department rose by 8% in the fiscal year that ended on Sept. 30, 2021, compared to the previous year, and remained well above pre-pandemic levels.
Alcohol As a Lucrative Investment Asset:
Rare whiskeys are incredible as investment vehicles. Aptly named ‘Liquid Gold’, this beloved liquor can preserve and even increase in value during economic instabilities, inflationary periods, and recessions. One simply cannot forget about the bottle of The Macallan 1926 Valerio Adami that sold in auction for $2.7 million in November 2023, or the 1975 cask of Ardbeg single malt which was acquired by a private collector in Asia in 2022 for over $20 million, more than double the amount Glenmorangie paid for the entire Ardbeg distillery and all its stock in 1997.
The Rare Whisky 101 Apex 1000 Index tracks whiskeys that are highly sought after for collection. It has gained over 383% since 2013, against 286% gains by S&P’s famous benchmark of the top 500 companies for the same period. The RW Japanese 100 Index, on the other hand, includes 100 collector’s bottles from Japan, and since 2015, the index has seen gains of more than 396%. The index includes bottles like Ichiro’s Malt ‘Card’ Ace of Spades, Ace of Diamonds, and King of Hearts, among others.
Similarly, if we enter the realm of rare wines, the Liv-ex Burgundy 150 Index tracks the ten most recently physical vintages for 15 white and red Burgundy, including six Domaine Romanée Conti labels. The index has gained over 102% over the last five years, against around 88% gains made by the broader market during the same period.
With that said, here are the Top Alcohol Stocks to Buy Right Now.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 920 hedge funds and picked the top 10 companies operating in the alcohol sector with the highest number of hedge fund investors. When two companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year instead. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Alcohol Stocks to Buy According to Hedge Funds:
10. Tilray Brands, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 14
Tilray Brands, Inc. (NASDAQ:TLRY) is one of the best alcohol stocks to buy according to hedge funds. The craft beer and cannabis company that was among the first to be licensed for medical cannabis in Canada announced last year that it had agreed to acquire eight beer and beverage brands from Anheuser-Busch InBev for an undisclosed amount.
The deal included the Shock Top, Blue Point, 10 Barrel, Breckenridge, Redhook, Widmer Brothers, Square Mile Cider, and HiBall Energy brands. With the satisfaction of customary closing conditions last October, combined with the pro forma sales revenue from the acquired businesses, Tilray Brands, Inc. (NASDAQ:TLRY) is now the 5th largest craft beer business in the U.S. with a 4.5% market share. Moreover, earlier this year, Tilray’s Breckenridge Distillery celebrated the wins of World’s Best Finished Bourbon, America’s Best Finished Bourbon, and Icons of Whisky Campaign Innovator of the Year: Highly Commended at the 2024 World Whiskies Awards.
However, the core business of Tilray Brands is cannabis and it boasts the number one market share in Canada, the leading cannabis market share by revenue in Germany, and it also distributes medical cannabis in 20 countries around the world.
In Tilray’s Q3 of 2024, which ended February 29th, the company reported revenue of $188.3 million, around 30% more than a year earlier. However, analysts were expecting a revenue $198.3 million, as the company has benefited from a boost in earnings due to recent acquisitions. The company also significantly reduced its loss to just $82.1 million compared to a massive $1.2 billion a year ago. The stock of TLRY was held by 14 hedge funds at the end of Q1 2024, with a collective stake value of over $14.7 million.
One thing that could benefit Tilray is the easing of federal restrictions on cannabis in the U.S. It was announced on the 16th of May that the US Justice Department has officially proposed a new rule that would reclassify marijuana from a ‘Schedule I’ drug, which includes heroin and LSD, to a less tightly regulated ‘Schedule III’ drug, which includes ketamine and some anabolic steroids. The decision marks a major policy shift by the federal government and while it would neither make the substance legal nor decriminalize it on a federal level, it would recognize the medical uses of cannabis and acknowledge that it has less potential for abuse than the many more harmful drugs. Also, after the rescheduling, cannabis companies operating in America would no longer have to follow tax provisions under a rule called 280E, which prevents them from taking standard business tax deductions.
Irwin Simon, the chairman and CEO of Tilray Brands, stated the following in the company’s Q3 2024 earnings call transcript:
“In the U.S., Tilray has multiple options and, in particular, is well positioned to benefit from the federal legalization of medical cannabis as a result of rescheduling. Yes, we believe that the rescheduling of cannabis from Schedule I to Schedule III in the U.S. would provide a path for Tilray to sell pharmaceutical grade medical cannabis in the U.S. subject to doctor prescriptions.
This is a different strategy from what MSOs are doing today. We believe there’s an opportunity to supply medical cannabis products from our existing operations into the U.S. for medical purposes. Further in the event of a future federal adult-use and medical cannabis legalization in the U.S., we believe Tilray is well positioned to immediately leverage its strong global leadership position, know-how and strategic strengths across operations, distribution and brands to sell THC infused products across its robust distribution network and sales channels in the U.S.”
As a result of the announcement by the US Justice Department on May 16th, Tilray saw its stock price move up by 6.3%. A day later, the company announced that it had filed for the sale of up to $250 million worth of its common stock through an at-the-market equity program. Tilray Brands, Inc. (NASDAQ:TLRY) plans to use proceeds from the sale to fund acquisitions or investments, including potential purchases of assets in the U.S. ‘in order to capitalize on expected regulatory advancements or expansion opportunities’.
9. Ambev S.A. (NYSE:ABEV)
Number of Hedge Fund Holders: 14
Ambev S.A. (NYSE:ABEV), formally Companhia de Bebidas das Américas, is a Brazilian brewing company that has now merged into Anheuser-Busch InBev. It offers beer under the brand names Skol, Brahma, Antarctica, Bohemia, Original, Quilmes, Paceña, Pilsen, Labatt Blue, Alexander Keith’s, Kokanee, and Guaraná Antarctica.
Ambev reported a revenue of around $20.27 billion in Q1 2024, 1.2% less than the same quarter last year. However, the company’s net income remained the same and its net revenue per hectoliter actually grew 0.9% versus last year. Moreover, the São Paulo-based beer maker reported a healthy debt/equity ratio of 4.37%, with total cash holdings of $13.92 billion. Although Ambev’s net profit in the last quarter of 2023 decreased by 11% compared to the previous year, the company remains optimistic for this year. It bases its expectations on two pillars – the solid performance in the first two months of 2024, driven by Carnival, and the expansion of sales of Premium beers. Moreover, Ambev S.A. (NYSE:ABEV) has a current forward P/E ratio of 12.42, even after steadily increasing or maintaining its revenue over the last 3 years, making it an undervalued alcohol stock in our opinion.
The shares of ABEV were held by 14 hedge funds at the end of Q1 2024 in the Insider Monkey database, with First Eagle Investment Management holding the largest stake of 312.7 million shares, valued at $775.9 million.
Ambev S.A. (NYSE:ABEV) is a great alcohol penny stock to own and ranks among the 12 Most Undervalued Penny Stocks to Buy Now.
8. MGP Ingredients, Inc. (NASDAQ:MGPI)
Number of Hedge Fund Holders: 22
If you’re a whiskey lover, you’ve almost certainly tried the offerings of MGP Ingredients, Inc. (NASDAQ:MGPI), knowingly or not. This Indiana distillery has fueled the modern American whiskey boom by supplying distillers like High West, Smooth Ambler, WhistlePig, Angel’s Envy, Bulleit, and many others.
The company has boasted a massive increase in earnings over the last few years. In 2019, MGP Ingredients, Inc. (NASDAQ:MGPI) declared revenue of $362.75 million, while by 2023, the company’s revenue had jumped up to $836.52 million – an increase of over 130%. The company completed the closure of its Atchison distillery in December 2023 due to headwinds facing its grain-neutral spirits, and as a result, its consolidated sales in Q1 2024 decreased by 15% compared to the prior year period to $170.6 million. MGP’s branded sales were also down 3% driven primarily by the temporary shutdown of its Lux Row distillery in Bardstown, KY, to complete the distillation expansion, as well as expected declines in its mid and value branded spirits price tiers. Due to the lower sales and a 10% decrease in gross profit in the first quarter, the stock of MGPI has witnessed a massive 53% decrease in share price since the beginning of the year. SouthernSun Asset Management LLC, an investment management firm, revealed the following reason for the fall in share price in its Q1 investment letter:
“Management noted that 2023 new distillate sales outpaced aged distillate sales for the first time since 2020, and they expect this trend to continue. New distillate carries a lower gross margin profile than aged, but customers contract for new distillate volumes for several years as opposed to aged distillate, which is primarily sold in the spot market. Management believes the shift to more new distillate sales will provide greater visibility into cash flows and lower the risk profile of the distilling solutions segment. However, the market seemed to react negatively to this news based on the slightly lower gross margin expectations.”
However, the firm remained hopeful and added:
“We believe the company has ample opportunity to grow both the top line and margins, as the team continues to build out the portfolio of premium, super premium and ultra-premium products in its branded spirits segment. We expect 2024 to be another year of investment as the company builds new warehouses to support growth in both the distilling solutions and branded spirits segments. These investments are supported by strong cash generated by the business, and we believe they will produce even stronger cash flow in 2025 and beyond.”
The stock of MGPI was held by 22 hedge funds at the end of Q1 2024 in the Insider Monkey database, with a collective stake value of over $112 million. MGPI is one of the best whiskey stocks to buy according to hedge funds.
7. The Boston Beer Company, Inc. (NYSE:SAM)
Number of Hedge Fund Holders: 22
Next up in our list of the Top Alcohol Stocks is The Boston Beer Company, Inc. (NYSE:SAM), one of the largest American-owned brewing companies, best known for its line of all-malt beers under the brand name Samuel Adams. The company reported a revenue of approximately $426 million in Q1 2024, an increase of 3.9% from the previous year. It also earned a net profit of $12.6 million versus a net loss of $8.96 million the year before.
One of TBBC’s core brands, Twisted Tea, posted strong growth with dollar sales up 21% in Q1 while growing share by 1.4 points in measured channels. However, the company reported declines in its Truly hard seltzer brand, which is now a smaller part of its business mix but maintains a 20% share of hard seltzer in measure channels.
SouthernSun Asset Management LLC stated the following about SAM in its Q1 investment letter:
“In the near term, we believe the company will remain focused on sustaining Twisted Tea’s growth, turning Truly volume trends, improving operations to enhance gross margins, and thus providing more funds to invest in its core assets as a company – its brands and its sales force. Overall, we remain confident management’s efforts and investments are likely to produce profitable growth that will reward investors over time.”
The share price of SAM jumped by over 22% on May 31st after a Wall Street Journal report that the beer maker is in talks to be sold to the Jim Beam-owner Suntory Holdings. However, the Japanese alcohol giant released a statement the very next day that it is not in talks to purchase The Boston Beer Company, Inc. (NYSE:SAM).
Among the 22 hedge fund holders of SAM in Q1 2024, Marshall Wace LLP held the largest stake of 137,515 shares, valued at $41.86 million.
6. Brown-Forman Corporation (NYSE:BF-B)
Number of Hedge Fund Holders: 30
Brown-Forman Corporation (NYSE:BF-B) is placed at number 6 among the Best Alcohol Stocks to Own According to Hedge Funds. The company engages in the production, distillation, bottling, import, export, marketing, and sale of a wide range of alcoholic beverages. This includes spirits, wines, whiskeys, flavored liqueurs based on whiskey, pre-mixed and pourable products, cocktails, vodkas, tequilas, champagnes, brandy, Bourbons, and liqueurs.
BF-B reported mixed Q4 (ending 30th of April 2024) results as its earnings per share rose 31% YoY to 56 cents and beat the Zacks Consensus Estimate of 42 cents. However, the company’s revenue of $964 million was around 7.8% less than the same quarter last year and missed the consensus estimate of $1.03 billion. This didn’t sit well with investors and Brown-Forman saw its share price fall by around 6% on June 5th. A major factor contributing to the decrease in revenue is a 10% drop in the sales of Jack Daniel’s in 2024, while the overall liquor portfolio was also down by 8%. The company is facing challenges mostly due to a subdued, inflation-driven consumer demand and hence also increasingly cautious retailers and distributors. But this is not something that is unique to BF-B.
However, there was positive news from emerging markets, as net sales there grew 5% on a reported basis and 8% on an organic basis, led by solid growth of New Mix in Mexico and Jack Daniel’s Tennessee Apple in Brazil. Moreover, the travel retail channel also delivered an 8% growth in net sales on a reported basis and 6% on an organic basis. The company is also benefiting from the rising spirits RTD trend, as sales of New Mix improved 32% on a reported basis and 17% on an organic basis, driven by an increase in prices. Brown-Forman’s gross margin has also improved by 150 points on an annualized basis compared to fiscal year 2023, highlighting the strength of its increasingly premiumized portfolio.
Shares of Brown-Forman Corporation (NYSE:BF-B) were held by 30 hedge funds at the end of Q1 2024, with Fundsmith LLP boasting the largest stake of around 11.46 million shares, valued at $591.5 million.
5. Diageo plc (NYSE:DEO)
Number of Hedge Fund Holders: 30
Diageo plc is a British multinational alcoholic beverage company with its headquarters in London, England. With over 200 brands sold in more than 180 countries, Diageo is the Largest Spirits Company in the World. The company’s portfolio has remarkable breadth across spirits and beer, with brands such as Guinness, Captain Morgan, Johnnie Walker, and Smirnoff etc. Diageo plc (NYSE:DEO) posted a revenue of over $21.58 billion in its last fiscal year ending June 30th 2023, up almost 15% from the previous year. However, the spirits giant has struggled during the first half of the current fiscal year due to an uneven consumer environment, fluctuating exchange rates, and inventory challenges in LAC. The group’s organic net sales declined by 0.6% in the first half of fiscal year 2024, while the organic operating margin also decreased by 167 basis points.
Despite the challenges, the company generated a strong free cash flow of $1.5 billion, up $0.5 billion YoY, and continues to focus on enhancing operational efficiencies and expanding its product portfolio. Moreover, DEO is a Great Alcohol Stock for Dividends, as the company stood up to its reputation as a very reliable dividend payer for decades and increased its dividend by 5%, maintaining its track record of dividend increases since fiscal year 2000.
Artisan Value Fund, an investment management company, stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2023 investor letter:
“Diageo is a global leader in alcoholic beverages with an impressive collection of brands across spirits and beers. The company’s portfolio of over 200 brands provides diversification and allows it to meet consumer trends. A key focus for growth has been premiumization, and today, Diageo’s portfolio is now more heavily weighted toward premium segments. Shares are trading at multiyear trough multiples on fears of growth normalizing after a COVID-induced bounce and premiumization headwinds as some markets are showing consumers trading down to value alternatives. In the near term, margin expansion will likely be constrained, but the company generates meaningful free cash flow and returns it to shareholders through dividends and share repurchases. Over the past five years, Diageo generated £12 billion FCF and returned £16 billion to shareholders. Although spirits are more cyclical than other staples, the company’s growth prospects are better long term, and we believe the current situation has provided us an attractive investment opportunity.”
DEO had 30 hedge fund holders in Q1 of 2024, with Orbis Investment Management holding the largest stake of 1.54 million shares valued at around $229.2 million. DEO is placed among the Top 5 Alcohol Stocks to Buy according to hedge funds.
4. Molson Coors Beverage Company (NYSE:TAP)
Number of Hedge Fund Holders: 36
Molson Coors Beverage Company (NYSE:TAP) ranks 4th in our list of the Best Alcohol Stocks in 2024. It is a multinational beverage and brewing company that engages in the production, marketing, and sale of beer, malt beverage products, and now also spirits across multiple regions including the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
Molson Coors reported a revenue of over $2.59 billion in Q1 of 2024, an increase of 10.6% from the previous year. Net profit also increased by over 186% to reach $207.8 million. A major reason for such a massive jump in profit could be the recent boycott against Bud Light, one of Molson Coors’ largest competitors in the American market. However, analysts at Citi stated in April that gains by Molson Coors due to the Bud Light upset are coming to an end. As a result, the stock plunged by almost 10% on the 30th of April. However, the company representatives state in the Q1 earnings call transcript that the American retailers are confident in its core brands, having allocated around 13% more space for Coors Light and Miller Lite in the US during spring resets, supporting their confidence that these share shifts are structural.
The steep selloff also seems excessive considering MC reported non-GAAP earnings per share of $0.95, which beat the estimates for $0.75 per share, while revenue estimates were also beaten by $100 million. The company also increased the quarterly dividend by over 7% earlier this year, bringing it up to $1.76 per share on an annual basis. Moreover, Molson Coors Beverage Company (NYSE:TAP) announced a new $2 billion share buyback plan in late 2023 that is expected to be completed over the next 5 years. With a market cap of just over $11 billion as of the writing of this article, a $2 billion buyback is set to significantly boost the stock’s EPS.
TAP was held by 36 hedge funds in the Insider Monkey database at the end of Q1 2024, with a collective stake value of around $848.5 million.
3. Anheuser-Busch InBev Sa/NV (NYSE:BUD)
Number of Hedge Fund Holders: 36
Anheuser-Busch InBev Sa/NV (NYSE:BUD) is the Largest Beer Producer by Volume in the World. The company had a global production volume of 585 million hectoliters in 2023 while boasting a revenue of $59.38 billion, an increase of over 2.7% from the previous year. This revenue increase was despite the company facing some headwinds in the American market last year after the recent controversy regarding its best-selling brand Bud Light, which resulted in the iconic brand losing its crown as the Top-Selling Beer in America after nearly two decades.
AB InBev’s total production volume decreased by 0.6% during the first quarter of 2024, as growth in the majority of its markets was offset by its volume performance in Argentina, China, and especially the U.S. However, revenue per hectoliter still increased by 3.3% as a result of revenue management initiatives and premiumization. Underlying EPS also increased by 16% compared to last year, reaching $0.75.
Despite the slight decrease in overall volume, the company’s portfolio seems to be gaining momentum thanks to the continued strength of its core mega brands. The sales of Busch Light have stayed strong, Stella Artois has witnessed market share gains after the recent partnership with David Beckham, Michelob Ultra is expected to profit from the increasing popularity in the U.S., and even Bud Light, despite the recent setback, has remained among the top four or five brands in most U.S. markets by sales.
Anheuser-Busch InBev Sa/NV (NYSE:BUD) also maintains a strong position in the swiftly emerging non-alcoholic beer segment. In fact, it has recently scored a sponsorship for the upcoming Olympic Games, making it the first beer company ever to sponsor the grand event. The IOC specifically highlighted Corona Cero – the non-alcoholic version of the global best-seller Corona – as the beer of choice for the partnership, which will stretch from the upcoming Paris 2024 Summer Games to the Los Angeles 2028 Summer Games. The brewing giant has also partnered with brands such as Roland Garros, NBA, UFC, NFL, and even UFC to market its core beers, reflecting its broad marketing capabilities.
Among the 36 hedge funds in the IM database that had invested in the Top Brewery Stock in Q1 2024, the largest stake of 9.29 million shares was held by Fisher Asset Management, valued at over $564.8 million.
2. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 43
Next up on our list of Best Alcohol Stocks is Monster Beverage Corporation (NASDAQ:MNST), an American beverage company that manufactures energy drinks including Monster Energy, Relentless, and Burn. It was announced in 2022 that the beverage giant had acquired the CANarchy Craft Brewery Collective in a deal worth $330 million. The acquisition gave Monster ownership of CANarchy’s craft breweries including Cigar City, Oskar Blues, Deep Ellum, Perrin Brewing, Squatters, and Wasatch.
The company also announced on the 31st of January 2024 that effective immediately, CANarchy Craft Brewery Collective would operate under the name Monster Brewing Company. CANarchy’s new alcohol products, The Beast Unleashed™ and Nasty Beast™ Hard Tea, now represent the majority of the California-based company’s alcohol beverage sales. This change will better align the business with Monster’s brand equity, particularly as these products are expected to continue to play an increasingly important role in CANarchy’s future activities.
The California-based company achieved record first-quarter net sales of $1.9 billion in Q1 2024, up 11.8% from the same quarter last year. Net income also jumped by 11.2% to $442 million. MNST’s growth is witnessed across all segments and geographic areas, indicating a strong demand for its products. The company also continues to be the market leader in the energy drinks category for all outlets combined in the United States in both the 13-week and 4-week periods ended April 20th, 2024. It must be remembered that Monster Energy accounts for around 92% of the company’s revenue and this all-important segment also grew by 10.7% during the first quarter. Monster Beverage Corporation also intends to seek authorization for share repurchases of up to $3 billion, shifting towards debt financing for capital structure. With a sustainable business model and an increasing demand for its products, Monster Beverage Corporation (NASDAQ:MNST) has grown revenues over the past 15 years at an impressive CAGR of 13.8%, significantly higher than S&P 500’s approximate CAGR of 5.2%
Shares of MNST were held by 43 hedge funds at the end of Q1 2024, with Broadwood Capital holding the largest stake of over 8.29 million shares valued at around $491.77 million.
1. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 47
Constellation Brands, Inc. (NYSE:STZ) continues to be the Best Alcohol Stock in 2024, with 47 hedge fund holders in Q1 2024 boasting an overall stake value of over $2.74 billion. The New York-based company is involved in the production, import, marketing, and sale of beer, wine, and spirits across the United States, Canada, Mexico, New Zealand, and Italy. The company made headlines last summer when its Mexican beer brand, Modelo Especial, became the Top-Selling Beer in America after dethroning Bud Light. As a result, STZ reported a revenue of over $2.12 billion during its last quarter of fiscal year 2024, a significant increase of 22.7% compared to the previous year. Net income also went up by 11.7% to reach $105 million.
The U.S. beer industry saw a tough start to the year, given the poor weather conditions in the states. However, STZ’s beer segment, which brought in 82% of its sales in FY 2024, still reported growth of 10.9% during the last quarter. The volume demand continues to grow and the company management stating that Q1 2025 is ‘setting us off on a really solid year’ suggests that they are seeing no major signs of slowdown. And while STZ’s Wine & Spirits segment witnessed a 5.6% decline in Q4, its smaller size minimizes the downside risk. For fiscal year 2024, Constellation Brands generated $2.8 billion in operating cash flow and was able to reduce its net leverage ratio by nearly half a point while returning over $900 million back to its shareholders through quarterly dividends and share repurchases. And although its forward dividend yield doesn’t seem high at 1.51%, the company has both paid and grown its dividends for the last eight years.
Another factor helping STZ is that America’s Hispanic population is growing almost twice as fast as its general population, so brands like Modelo and Corona are expected to stay in high demand.
While we acknowledge the potential of STZ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as STZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
