Top Beer Stocks for Q4 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 SA/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 recession that took place in 2020 was spurred by the health crisis related to COVID-19. The pandemic changed consumer behavior worldwide, sharply lowering beer demand in many regions as bars and restaurants temporarily closed or reopened with reduced capacity. Beer demand has begun to recover amid vaccine rollouts and economic reopening.

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 16.2% over the past 12 months, well below the 39.0% total return of the iShares Russell 1000 ETF (IWB). These market performance numbers and the statistics in the tables below are as of Sept. 8, 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 Compañía Cervecerías 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.
• 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. In Q2 of its 2021 fiscal year (FY) ended June 30, 2021, Ambev delivered its highest consolidated volumes ever for a second quarter. The company is still facing some headwinds related to the pandemic but those are beginning to fade amid vaccine rollouts and the reopening of economies in regions where it operates.
• 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 said that its total volumes in Q2 FY 2021, ended June 30, 2021, were up 20.8% compared to the year-ago quarter. The company said that it was still dealing with the ongoing impacts of the pandemic.

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: See above for company description.
• United Breweries Co. Inc.: See above for company description. Because the company's EPS went from negative in the year-ago quarter to positive in the most recent quarter, an EPS growth rate could not be calculated for the above table.
• Ambev SA: 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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• United Breweries Co. Inc.: See above for company description.
• Diageo PLC: Diageo is a U.K.-based alcoholic beverage company. In addition to beer, the company offers other branded alcoholic beverages, including vodkas, whiskeys, tequilas, and gins. Diageo announced in August that it agreed to acquire spirit producer Mezcal Unión through the acquisition of Casa UM. Mezcal Unión was launched in 2011 and has since become a leading mezcal brand in Mexico. Mezcal is a cousin of Tequila. Financial terms of the transaction were not disclosed.
• Ambev SA: See above for company description.

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