Beer Loses Fizz as Spirits Gain Popularity: Top 10 Stocks to Buy

3. Molson Coors Beverage Company (NYSE:TAP)

Number of Hedge Fund Investors  in Q1 2024: 36

Molson Coors Beverage Company (NYSE:TAP) is a diversified beer company that sells products in all price categories. This provides it an edge in a tough market, where consumers can choose to buy less pricey products. At the same time, since it’s primarily a beer company, Molson Coors Beverage Company (NYSE:TAP) stands to lose quite a bit if the current trends toward spirits continue. Therefore, it’s unsurprising that its shares fell by 9.9% in April after the firm’s Q1 report revealed that it was taking a cautious outlook for the rest of the year and did not increase its guidance. These results came after data showed that Molson Coors Beverage Company (NYSE:TAP) lost market share in April. Since it’s a large and established company, investors primarily value the firm based on its volume shipped and its cost control. Any trouble in these areas can create headwinds for the shares, and for Molson Coors Beverage Company (NYSE:TAP), the recent market share losses are particularly worrying as its competitor AB-INBEV continues to recover from the political controversy surrounding its Bud Light beer.

Molson Coors Beverage Company (NYSE:TAP)’s management shared during its Q2 2024 earnings call that it aims to maintain its guidance for the year. Here is why:

“In the second quarter, we essentially held our top line and grew our bottom line while cycling a very difficult year-over-year comparison. If you recall, the second quarter of 2023 was our strongest second quarter net sales revenue since the 2005 Molson and Coors merger.

Consolidated net sales revenue was down 0.1%. Underlying pretax income grew 5.2%, and underlying earnings per share grew 7.9%, while we continue to invest behind our brands globally heading into peak season. We also accelerated the pace of share repurchases for the quarter given compelling valuation as we see it, amid the strong performance of the business and our confidence in our long-term algorithm. Contributing meaningfully to our results was our EMEA & APAC business due to favorable net pricing, premiumization and brand volume growth. For the first half of the year, we increased net sales revenue by 4.2%, underlying pretax income by 20.4% and underlying earnings per share by 23.8%. While this is a very strong performance year-over-year, there are a few timing factors that will impact us in the third and fourth quarters, which is why we are maintaining our guidance for the full year.”