In this article we discuss the 10 best wine stocks to invest in 2021. If you want to skip our detailed analysis of these companies, go directly to the 5 Best Wine Stocks to Invest in 2021.
The wine industry in the United States, which traditionally relies on tasting room and restaurant sales for close to half of all revenue generated during a fiscal year, was hit hard by the sweeping coronavirus lockdown restrictions placed on eateries in early 2020. According to a report by California-based commercial banking firm Silicon Valley Bank, in April 2020, just as the lockdowns were being enforced, restaurants and tasting room sales accounted for 43% of the average sales for wineries across the country.
Some of the losses incurred as a result of the COVID-19 lockdown were offset by the shifting consumer demands for wines, with many wine-making firms shifting their operations online. Silicon Valley Bank has projected that this shift is not temporary, but marks a permanent change in consumer behavior that will likely bring in lots of revenue for wine companies in the coming years. As the vaccine rollout allows for the reopening for restaurants and tasting rooms, the wine industry is looking set for a blockbuster comeback this year.
Brown-Forman Corporation (NYSE: BF-B), the Louisville-based firm that is one of the largest winemakers in the US, crushed market predictions for revenue and earnings per share in the third fiscal quarter, and has been tapped as one of the companies that will improve further on the earnings in the coming months. Investment advisory Cowen maintained an Outperform rating on Brown-Forman Corporation (NYSE: BF-B) stock in March with a price target of $100, noting the money spent by the winemaker on advertisements that was likely to boost sales.
Another giant of the wine industry that investors should have on their radar for the post pandemic economic recovery is Diageo plc (NYSE: DEO), the United Kingdom-based multinational beverage firm that sells drinks in more than 170 countries around the world. On May 12, Diageo plc (NYSE: DEO) stock surged close to 4% after the firm issued a first half update and announced the resumption of buybacks. It also stated that it expected organic operating profit growth to be at least 14% this fiscal year, ahead of organic net sales growth.
New York-based winemaker Constellation Brands, Inc. (NYSE: STZ) is also a solid bet in the industry with a stellar financial record and its status as the largest beer importer in the US. On May 17, Constellation Brands, Inc. (NYSE: STZ) announced that it had bought a stake in La Fete du Rose, a premium rose wine label that markets itself to multicultural consumers. The investment was a part of the Focus on Minority Founders, an initiative which envisions $100 million in investments in minority-owned businesses by 2030.
Some of the key takeaways that are expected to shape the short-term future trends in the wine business include improved demand from consumers who want to frequent restaurants and bars after more than a year confined to their homes, the opportunities presented by ecommerce sales and digital advertisement strategies, as well as the question of wine balance supplies. The wine industry is perhaps adapting to the changing market dynamics faster and better than some industries that are under immense pressure from technology-related changes.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 best wine stocks to invest in 2021.
Best Wine Stocks to Invest in 2021
10. Corby Spirit and Wine Limited (TSE: CSW.B)
Number of Hedge Fund Holders: N/A
Corby Spirit and Wine Limited (TSE: CSW.B) is a Canada-based alcohol manufacturing and distribution company founded in 1924. It is placed tenth on our list of 10 best wine stocks to invest in 2021. The stock has returned more than 26% to investors over the past year. Some of the famous brands owned by the firm include J.P. Wiser’s Canadian Whisky, Worts Canadian whiskies, Lamb’s rum, Polar Ice vodka, McGuinness liqueurs, Mumm Champagne, and Jacob’s Creek, Stoneleigh, Campo Viejo, and Wyndham Estate wines, among others.
On May 13, Corby Spirit and Wine Limited (TSE: CSW.B) posted earnings results for the third fiscal quarter, reporting a net revenue of over $6 million, up more than 20% compared to the net revenue for the same period last year.
Corby Spirit and Wine Limited (TSE: CSW.B) is a good option for income investors as the firm pays a regular and healthy dividend. On May 13, the firm declared a dividend of $0.21 per share, in line with a policy to pay 90% of prior year earnings.
9. Truett-Hurst, Inc. (OTC: THST)
Number of Hedge Fund Holders: N/A
Truett-Hurst, Inc. (OTC: THST) is a California-based company that makes and sells wines. It was founded in 2007 and is ranked ninth on our list of 10 best wine stocks to invest in 2021. The company’s shares have offered investors returns exceeding 80% over the course of the past twelve months. Some of the different varieties of wines the firm markets include Pinot Noir, Chardonnay, Sauvignon Blanc, Zinfandel, Petite Sirah, and Syrah, among others. These are sold under brands such as VML, Truett Hurst, and Svengali.
Truett-Hurst, Inc. (OTC: THST) has a market cap of over $5 million and the price of the stock over the past 52 weeks lies between $0.2 and $0.9.
The company was listed on the NASDAQ exchange, but in 2019, the board of directors of Truett-Hurst, Inc. (OTC: THST) approved a plan for a voluntary delisting in favor of trading on over the counter markets such as OTC Pink.
Just like Brown-Forman Corporation (NYSE: BF-B), Diageo plc (NYSE: DEO), and Constellation Brands, Inc. (NYSE: STZ), Truett-Hurst, Inc. (OTC: THST) is one of the best wine stocks to invest in 2021.
8. Eastside Distilling, Inc. (NASDAQ: EAST)
Number of Hedge Fund Holders: N/A
Eastside Distilling, Inc. (NASDAQ: EAST) is an Oregon-based beverage firm which markets different types of coffee as well as alcoholic drinks. It was founded in 2004 and is placed eighth on our list of 10 best wine stocks to invest in 2021. The company owns famous brand names such as Hue-Hue Coffee Rum, Azuñia Tequila, Portland Potato Vodka, and Burnside Whiskey, among others. The company shares have returned more than 141% to investors over the past twelve months.
In quarterly earnings results for the first quarter of 2021, posted on May 13, Eastside Distilling, Inc. (NASDAQ: EAST) reported a revenue of over $3.24 million, down more than 4% compared to the revenue over the same period last year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Eastside Distilling, Inc. (NASDAQ: EAST) with 261,170 shares worth more than $483,000.
Just like Brown-Forman Corporation (NYSE: BF-B), Diageo plc (NYSE: DEO), and Constellation Brands, Inc. (NYSE: STZ), Eastside Distilling, Inc. (NASDAQ: EAST) is one of the best wine stocks to invest in 2021.
7. Ambev S.A. (NYSE: ABEV)
Number of Hedge Fund Holders: 18
Ambev S.A. (NYSE: ABEV) is a Sao Paulo-based brewing company. It was founded in 1999 and is placed seventh on our list of 10 best wine stocks to invest in 2021. The company markets alcoholic beverages, carbonated drinks, and non-alcoholic beverages mostly in South America and North America. The firm is famous for many brands, including Skol, Brahma, Antarctica, Brahva, Brahva Gold, Extra, Budweiser, Bud Light, Stella Artois, Corona, Modelo Especial, and Beck, among others. The stock has returned more than 26% to investors in the past year.
In quarterly earnings results for the first three months of 2021, posted on May 6, Ambev S.A. (NYSE: ABEV) posted a net income of R$2.73 billion, up more than 125% compared to the net income over the same period last year.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $228 million in the firm, the same as in the preceding quarter worth $306 million.
In its Q1 2020 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Ambev S.A. (NYSE: ABEV) was one of them. Here is what the fund said:
“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
6. Compañía Cervecerías Unidas S.A. (NYSE: CCU)
Number of Hedge Fund Holders: 7
Compañía Cervecerías Unidas S.A. (NYSE: CCU) is a Chile-based beverage company founded in 1902. It is ranked sixth on our list of 10 best wine stocks to invest in 2021. The company’s shares have returned more than 10% to investors over the past twelve months. The company operates in several countries in the American region, including Chile, Argentina, Bolivia, Colombia, Paraguay, Uruguay and Peru. It also has stakes in the food and retail business, as well as hotels and bars.
On May 5, Compañía Cervecerías Unidas S.A. (NYSE: CCU) posted earnings results for the first three months of 2021, reporting a revenue of CLP569.64 billion, up more than 11% compared to the revenue for the same period last year.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $22.4 million in Compañía Cervecerías Unidas S.A. (NYSE: CCU), down from 8 in the previous quarter worth $25.3 million.
Just like Brown-Forman Corporation (NYSE: BF-B), Diageo plc (NYSE: DEO), and Constellation Brands, Inc. (NYSE: STZ), Compañía Cervecerías Unidas S.A. (NYSE: CCU) is one of the best wine stocks to invest in 2021.
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Disclosure: None. 10 Best Wine Stocks to Invest in 2021 is originally published on Insider Monkey.
