Constellation Brands, Inc. (STZ), Diageo plc (ADR) (DEO), Brown-Forman Corporation (BF.A): Raise Your Glass to These Wine Stocks

Providing the best of both worlds, Diageo plc (ADR) (NYSE:DEO) both pays a dividend (current yield is at 2.4%) and has had stock price performance that outstripped the Standard and Poors for the last year. The CAPS rating is a 4 out of 5, and most Fools like its geographic reach, brand diversity, longevity, and marketing strength. There are some concerns that it could be a tad overvalued – the stock is trading north of $121 per share today and has a price/cash flow ratio of 19.6 – but for the most part, Diageo plc (ADR) (NYSE:DEO) is a solid blue chip choice. I also like its low debt position, ability to innovate new brands and drinks, and willingness to overhaul older, tired brands when the time is right.

I personally love Sterling Wines and the nice little gondola ride up the hill to the tasting rooms, so I would love to invest in Diageo to have a very small ownership stake in one of my favorite places.

Brown-Forman

It will probably be a surprise to many, but the popular Sonoma Cutrer winery as well as Korbel Champagnes are owned by good old Brown-Forman Corporation (NYSE:BF.A); manufacturer of our old college friend, Jack Daniels.  Another wine-related revenue stream for Brown-Forman Corporation (NYSE:BF.A) is oak barrels, which is responsible for that nice, rich taste found in premium wines.  Brown-Forman has a healthy CAPS rating of 4 out of 5; as one foolish CAPs commentator pointed out, “Jack never goes out of style”.  From wedding season to New Years Eve, neither does Korbel. Although the EPS took a 6.1% hit from a year ago, the company posted 7.5% revenue growth and is widely heralded as a great, long term play. So our friend Jack won’t make us rich (as many have learned while consuming too much of a good thing), but investing in him will give us some good, long term and stable capital appreciation.

In summary – alcohol stocks make good investments in both good and bad times. In the good times, we celebrate.  In the bad times, we cry into our beer…..or wine….

Brenda Johnson has no position in any stocks mentioned. The Motley Fool recommends Diageo plc (NYSE:DEO) (ADR).

The article Raise Your Glass to These Wine Stocks originally appeared on Fool.com.

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