Among ample advice concerning healthy eating and drinking habits, mothers typically trumpet that too much of anything sweet is something to avoid. Soda pop is the usual target; mothers advocate for drinks they view as more nutritious, such as milk and pure juices.
From an investing standpoint, however, mothers should also consider the income opportunities available through investing in companies that delve in an array of drinks. The following are seven things your mother never told you about beverage companies, such as Cott Corporation (USA) (NYSE:COT) , Monster Beverage Corp (NASDAQ:MNST) , and Starbucks Corporation (NASDAQ:SBUX):
1. The Potential Exists for EPS Growth
Cott’s earnings per diluted share increased to $0.02 for the fourth quarter of 2012. This is in comparison to a loss per diluted share of $0.12 in the prior year period.
Monster Beverage’s net income per diluted share for the same quarter increased 10.6 percent to $0.39. The company’s net income per diluted share was $0.35 in the comparable quarter in 2011.
For Q1 2013 (13 weeks ended Dec 30, 2012) Starbucks Corporation (NASDAQ:SBUX)’ EPS increased 14% to a record $0.57 per share. This is versus $0.50 per share in the first quarter of the prior fiscal year.
2. They’re Forward Thinking
announced last month a strategic agreement with Cott’s subsidiary Cott Beverages, Inc. to make flavors produced specifically for the SodaStream carbonation system. First production will consist of existing SodaStream flavors, and this represents a new revenue stream for Cott.
Monster Beverage Corp (NASDAQ:MNST) is full speed ahead with new launches this year. They successfully launched the Monster Beverage Corp (NASDAQ:MNST) Energy brand in several new global markets recently.
Starbucks acquired the Evolution Fresh juice brand (bottled/cold pressed juices) more than a year ago. The company is expanding this brand’s distribution to Boston and New York. By the end of 2013, their corporate objective is to have this brand in approximately 8,000 locations. In addition, Starbucks opened their first trio of stores in India.
3. They Often Deliver Income Growth
Cott’s net income for 2012 was $48 million, a 27% increase versus the year prior’s $38 million.
For the same fiscal year, Monster Beverage Corp (NASDAQ:MNST)’s net income grew 18.8 percent to $340 million. This is in comparison to 2011’s $286.2 million.
For Starbucks’ Q1 (2013), consolidated operating Income increased 13% to $630.6 million – a record for the company. This is compared to $556 million for the year ago period.
4. Cott – Cash Flows, EBITDA Grows
Cott’s free cash flow was $101 million for 2012’s fourth quarter. The ability to consistently generate free cash flow is an important indicator of a company’s financial health. It means they can grow their business without resorting to external financing. In essence, they’re funding their own expansion and growth initiatives.
Free cash flow is very important to investors. A company that’s generating free cash flow can use some of this cash to pay dividends and also use this cash to fund dividend increases.
Cott’s EBITDA increased 8% to $209 million in 2012. This is compared to $193 million for the year prior.
5. Monster Beverage – They’re Outperforming With Energy Drinks
Mr. Rodney C. Sacks, Company Chairman and CEO, stated: “While the growth of the energy drink market in the United States has softened from previous quarters, the Monster Energy® brand continues to grow in excess of market growth” (emphasis mine).
6. Starbucks – They’re on Trend…Always
Single cup coffee machines are all the rage today. Starbucks’ single cup pod brewer, the Verismo Coffee Machine, is making its presence felt in this competitive market. The company sold (up to Dec 30, 2012) more than 150,000 Verismo machines since they introduced it to the market in September 2012.
Furthermore, they acquired Teavana. They’re making a play into the specialty tea market. This represents significant potential for new revenues and returns for the company – and their investors. Teavana has more than 300 locations.
7. Their Initiatives Often Manifest as ROI
Cott’s strength is private-label beverages. They’re one of the world’s largest producers of beverages for retailers, brand owners, and distributors. The company is a leader in retailer brand carbonated soft drinks (CSDs) and Juices in North America. They’re also a leader in retailer brand CSDs and contract manufacturing in the United Kingdom.
For Monster Beverage Corp (NASDAQ:MNST), energy drinks are only one element of their diverse product lineup. The company also markets and distributes non-carbonated coffee, non-carbonated espresso energy drinks, iced teas, natural sodas, apple juice and juice blends, multi-vitamin juices, lemonades, vitamin enhanced waters, and probiotic drinks.
Starbucks Corporation (NASDAQ:SBUX) opened their 100th store in Beijing, China. The company has an aggressive growth strategy in place for this nation of approximately +1.3 billion people.
Mothers typically know best. If some take the time to perform due diligence as concerns beverages, they may advocate the potential in the above companies and others in this industry. They may try to divert you from some sugary drinks, but not the ROI potential in the overall offerings of these companies.
The article 7 Things Your Mother Never Told You About Beverage Companies originally appeared on Fool.com is written by Michael Ugulini.
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