12 Best Brewery Stocks to Buy According to Hedge Funds

9. Ambev S.A. (NYSE:ABEV) 

Number of Hedge Fund Holders: 19

Ambev S.A. (NYSE:ABEV), formally Companhia de Bebidas das Américas, is a Brazilian brewing company that has now merged with Anheuser-Busch InBev. It offers beer under several brand names such as Skol, Brahma, etc, and claims to be the largest brewer in Latin America in terms of sales volume. Ambev also has a relationship with PepsiCo to bottle, sell, and distribute its products in several Latin American countries, including Brazil.

Ambev S.A. (NYSE:ABEV) remains challenged by various macroeconomic factors including higher costs of energy, raw materials, packaging, logistics, and labor, which are putting pressure on its brewing operations across various countries. However, with a deep-pocket owner like Ab InBev, an extensive distribution network, and a diverse product portfolio, the company has been resilient in both local and international markets.

Ambev S.A. (NYSE:ABEV) had a mixed Q3 as tax effects impacted net profit, despite a 12% increase in revenue, although sales volumes declined compared to the previous year. The company’s brand strategy continued to work and its premium brands grew by more than 20% led by Corona, Spaten, and Original, all of which witnessed volume upticks of over 25%. The core plus brands grew in the low teens, led by Budweiser, which increased volumes by nearly 50%. This strong performance across various product categories highlights Ambev’s ability to meet diverse consumer preferences. It also means that true beer fans remain willing to pay a premium for the higher-end beers that the company offers.

Over the last five years, Ambev S.A. (NYSE:ABEV) has generated BRL 68 billion (around $11 billion) in free cash flow and it maintained this performance in Q3 2024, as it reported a cash flow of nearly $1.33 billion from operating activities. The company has also benefited greatly from exchange rate fluctuations on cash held in its international operations.

Ambev S.A. (NYSE:ABEV) has returned over BRL 43 billion (approx. $7 billion) to shareholders since 2020 and recently, it approved a BRL 2 billion ($330 million) share buyback program, demonstrating its disciplined approach to capital allocation. The company also announced a dividend of $0.0414 per share earlier this month.

19 hedge funds in the IM database held shares of Ambev S.A. (NYSE:ABEV) at the end of Q3 2024, with a total stake value of $522.4 million, a staggering 165% increase from the previous quarter.