2. Molson Coors Beverage Company (NYSE: TAP)
Number of Hedge Fund Holders: 39
Molson Coors Beverage Company (NYSE: TAP) is an Illinois-based multinational drink and brewery firm founded in 1873. It is placed second on our list of 10 best whiskey and alcohol stocks to buy in 2021. The firm has operations in the US, Canada, and some European countries. Molson stock has returned more than 45% to investors in the past year. The company has a market cap of more than $12 billion and posted annual revenue of more than $9.5 billion in 2020, slightly below $10.5 billion reported in 2019.
On April 29, Molson Coors Beverage Company (NYSE: TAP) posted quarterly earnings for the first three months of 2021, reporting a revenue of more than $1.9 billion, beating market estimates by close to $30 million.
At the end of the fourth quarter of 2020, 39 hedge funds in the database of Insider Monkey held stakes worth $386 million in the firm, up from 33 in the preceding quarter worth $316 million.
In its Q3 2020 investor letter, Argosy Investors highlighted a few stocks and Molson Coors Beverage Company (NYSE: TAP) was one of them. Here is what the fund said:
“I purchased shares of Molson Coors (TAP) during the third quarter, and this mid-tier brewer is valued attractively at less than 8x EBITDA, at the low end of historical multiples.
I do not expect a lot of growth from this investment, but it is challenging to find fairly-priced resilient businesses in the current environment, and if there is one thing I can count on is that people will drink beer, especially during a pandemic. The biggest risk is obviously that they may choose to drink other types of beer, specifically craft beers. While the company’s balance sheet is a little stretched, I believe the company is focused on reducing debt, most noticeably in their decision to suspend their dividend for 2020. I do not believe this investment will provide explosive returns for us, but I believe it is an attractive alternative to cash. The company can pay down significant amounts of debt fairly quickly and deliver reasonable equity returns by doing so.
Additionally, the company recently got into the hard seltzer game, specifically through their Vizzy and Coors Seltzer products. The author took the opportunity to sample these products over the Labor Day holiday, and came away impressed with the decent flavors, and subsequent conversations with millennials and particularly millennial females who had tried the product reflected positive early feedback for these offerings. Finally, Molson Coors announced a partnership with Coca-Cola to develop their Topo Chico hard seltzer product. The hard seltzer category is growing mid-teens percent annually right now, and I believe Molson Coors has enough irons in the fire here to make a decent impact on their top and bottom lines. Any amount of unexpected growth from these products would be a cherry on top to our investment case.”
