3 stocks of alcoholic drinks showing their minds
April 5, 2021
4 min read
This story originally appeared on MarketBeat
Despite the bar and restaurant closures just over a year ago, various factors have helped alcoholic beverage companies, such as Boston Beer Company (NYSE: SAM), Constellation Marks (NYSE: STZ) and Willamette Valley Vineyards (NASDAQ: WVVI), stay on top like an olive garnishing a martini.
Forty-nine of the 50 states have relaxed alcohol laws in one form or another, to give bars and restaurants some sort of lifeline. For example, many states now allow mixed drinks to take out, which was rare before the pandemic.
In addition, consumers were making more purchases for home consumption. Of course, the merits of turning to alcohol to relieve anxiety or boredom in the Covid era can be debated. But for distilleries, breweries and vineyards, the snap of spring 2020 was not a death knell.
Boston beer, whose symbol reflects its most famous product, Sam Adams, also owns other brands, including Seltzer Truly Hard Cider and Angry Orchard Cider. The stock is trading at record highs, closing Thursday at $ 1,184.68.
In the most recent quarter, the company reported adjusted earnings per share of $ 2.56, lower than analyst estimates, but still a year-over-year gain of 142%. Revenue of $ 460.94 million atop Wall Street views.
The company attributed the shortfall to reduced bar and bar-restaurant orders, as well as disruptions in its production process.
In early March, Morgan Stanley cover initiated Boston Beer with a target price of $ 1,400 and an overweight rating. The analyst noted that the company is focused on its hard seltzer business, which accounted for about half of its sales last year.
The stock is trading just below its March 31 high of $ 1,256.04. It ended Thursday’s session 5% above its 10-day moving average and 12.6% above its 50-day line. It may be in a buy zone right now, but watch for continued support above these key averages to ensure institutional investors are not in the mood for profit.
Constellation marks is not well known, but many of its products are. The company’s portfolio includes Corona and Modelo beers, Casa Noble tequila, Svedka vodka and Kim Crawford wines, among others. He owns a 38% stake in the cannabis producer Canopy Growth (NASDAQ: CGC), for the purpose of making cannabis infused drinks.
Last year, it acquired Empathy Wines, a direct-to-consumer wine brand founded by influencer and social media entrepreneur Gary Vaynerchuk. The category of direct-to-consumer wines has grown rapidly in recent years, with a huge increase in 2020.
Constellation Brands is expected to release its fourth quarter results on Thursday, April 8. Analysts expect earnings of $ 1.44 per share on revenue of $ 1.86 billion. He beat analyst estimates in each of the last 10 quarters.
The stock has formed a flat base since retreating from its high of $ 224.62 in mid-February. It closed Thursday at $ 229.62, bouncing off its 50-day average during the session, finishing 1.7% above that line. Watch for a buy opportunity if the stock clears resistance above its February high.
Willamette Valley Vineyards is a small company, with a market capitalization of just $ 45.4 million. Like its larger peers, it has recently seen strong price increases. The stock is up 43.64% year-to-date and 90.63% on a one-year basis.
Shares closed Thursday at $ 9.15, up $ 0.10 or 1.1%.
The company, known for its Oregon pinot noir wines, reported fourth quarter results in mid-March. Earnings were $ 0.15 per share, up 25% from the prior year quarter. Revenue was $ 8.3 million, a 15% year-over-year increase.
In the earnings press release, CEO Jim Bernau cited the team’s success in direct-to-consumer sales to make up for lost sales in bars and restaurants in 2020. He noted that the company added employees last year and did not need Paycheck Protection Program loans.
The stock is up 11% since its earnings report. It is currently trading just above its 10-day moving average and 14.6% above its 50-day line. It has shown that the trade has been sideways in the last few sessions, and could offer a new buying opportunity if it can clear resistance above $ 9.50 in high trading volume.
Investors need to be more careful with small stocks like this, as a lack of liquidity and institutional ownership could lead to a rapid upheaval.