Top Beer Stocks for Q3 2021

The beer industry is made up of companies specializing in the production of beer, although many of them produce other alcoholic and non-alcoholic beverages. Some of the big names in the industry include Netherlands-based SABMiller International BV, Belgium-based Anheuser-Busch InBev NV (BUD), and Japan-based Kirin Holdings Co. Ltd. (KNBWY). Demand for beer, a beverage, historically has remained stable throughout economic cycles. As a result, the beer industry is part of the much broader consumer staples sector.

Unlike many past economic downturns, the one that took place over the past year was spurred by the health crisis related to COVID-19. The pandemic dramatically changed consumer behaviour worldwide over the past year, sharply lowering beer demand in many regions as bars and restaurants temporarily closed or reduced capacity. Beer demand may recover in the coming months in the U.S. as the economy opens up and as consumers dine out more.

Beer stocks, represented by the broad Consumer Staples Select Sector SPDR ETF (XLP), have underperformed the broader market. XLP has provided a total return of 22.3% over the past 12 months, well below the Russell 1000's total return of 38.3%. These market performance numbers and the statistics in the tables below are as of June 3, 2021.

Here are the top 3 beer stocks with the best value, the fastest growth, and the most momentum.

Best Value Beer Stocks

These are the beer stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

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• United Breweries Co. Inc.: United Breweries, also known as Compania Cervecerias Unidas, is a Chile-based producer and distributor of a wide range of branded beers. The company also produces wines, spirits, and non-alcoholic beverages such as soft drinks, bottled water, and juices.
• Constellation Brands Inc.: Constellation Brands is an alcoholic beverage company engaged in the production, marketing, and distribution of beer, wine, and spirits.
• Ambev SA: Ambev is a Brazil-based company primarily engaged in the production and distribution of beer. The company also produces and distributes soft drinks and other non-alcoholic beverages including non-carbonated beverages. Ambev announced in early May financial results for Q1 of its 2021 fiscal year (FY), which ended March 31, 2021. Profit rose 125.7% as net revenue grew 32.0% compared to the year-ago quarter. The company said that it was facing many of the same challenges this year due to the pandemic that it faced in 2020.

Fastest Growing Beer Stocks

These are the top beer stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

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• Anheuser-Busch InBev SA/NV: Anheuser-Busch is a Belgium-based holding company engaged in the manufacture and distribution of alcoholic and non-alcoholic beverages. The company owns a portfolio of more than 400 different beer brands including Budweiser, Corona, and Stella Artois. Anheuser-Busch announced in early May that Michel Doukeris, president of AB InBev's North America Zone, has been elected to succeed Carlos Brito as chief executive officer (CEO), effective July 1, 2021. The company's EPS went from negative in the year-ago quarter to positive in Q1 FY 2021, which is why we cannot calculate a growth figure for the metric in the table above.
• Boston Beer Co. Inc.: Boston Beer is a brewer engaged in the business of producing and selling craft-brewed beers and cider products at its own breweries and various other contract breweries. The company announced in mid-May that it was setting up a subsidiary in Canada to act as a research and innovation hub focused on non-alcoholic cannabis beverages.
• United Breweries Co. Inc.: See above for company description.

Beer Stocks with the Most Momentum

These are the beer stocks that had the highest total return over the last 12 months.

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• Boston Beer Co Inc.: See above for company description.
• Molson Coors Beverage Co.: Molson Coors is a holding company that produces and sells beer, including brands such as Coors Light, Miller Lite, and Molson Canadian. The company announced in late April financial results for Q1 FY 2021, which ended March 31, 2021. Molson Coors reported net income of $82.0 million, a significant turnaround from the net loss of $115.4 million posted in the year-ago quarter. However, net sales for the quarter fell 9.7%. Cost of goods sold fell at a faster pace than net sales, helping to boost net income.
• Ambev SA: See above for company description.

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