This week’s Stock of the Week is a well-known beverage company that can do well no matter what.
Molson Coors Brewing Company (TAP) has an exceptionally large number of beer brands and other beverages under its worldwide umbrella. A few of the best-known that it brews and/or distributes are Coors, Miller, Molson, Carling, Modelo, Tecate, Dos Equis, Amstel and Heineken. The firm is also deeply involved in the high-margin craft-beer business through its Blue Moon Brewing Company brands and others.
Beer companies traditionally do well when the economy falters, but Molson Coors stands up well even in a strong economy such as the current one. It has $1.4 billion a year of free cash flow, easily covering its current dividend of $1.64/share/yr., recently yielding 2.3%. Its business is well-diversified internationally with about 70% of sales in North America and the rest in Europe, Latin America and the Asia-Pacific region—so there’s plenty of room for future growth. The firm’s book value is $61/share, and it has been trading near that amount, making it a buying opportunity for a financially strong, defensive stock with 11.5% return on equity.
Revenue should continue its slow-growth pattern for the next several years: It was $11 billion last year and is likely to be $11.03 billion this year and $11.09 billion in 2019.
Fiscal year: December. Earnings per share: 2019 est./$5.12…2018 est./$4.87…2017/$4.55.
Jack Newell is chairman and CEO, Dover Partners Inc., Dayton, Ohio, which manages $100 million. Dover-Partners.com