Make money with your favorite 4th of July beverage

Constellation Brands, up 89%, is the biggest gulp over the past 12 months.

By TheStreet Staff Jul 3, 2013 11:39AM

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Celebration © Stan Fellerman, CorbisBy Richard Suttmeier


When my wife and I raised our two sons on Long Island, first in Greenlawn then in Munsey Park, it was our legacy to host a Fourth of July pool party. Our guests were mostly my wife's relatives, and over the years you knew the most popular alcoholic beverages among the adults and among the cousins as they became old enough to drink.


The alcoholic beverage industry is in the consumer staples sector as most folks will maintain an inventory of their favorite brews, wines and spirits regardless of economic times. The consumer staples sector is 17.0% overvalued with the alcoholic beverage industry 7.8% overvalued.


On Tuesday in Sector Ratings Set Asset Allocations (TheStreet) I gave the consumer staples sector an overweight rating and today I provide buy-and-trade profiles for seven stocks in the beverage industry.


On Tuesday morning, one of my choices Constellation Brands (STZ) reported quarterly earnings. The company missed on both the EPS and revenue lines. The producer of wine, beer and spirits traded lower premarket. After a down day on Tuesday this stock was upgraded to "buy" this morning.


Also on Tuesday, Molson Coors (TAP) was upgraded to "buy" from "hold" according to ValuEngine.


Among the seven beverage stocks three are undervalued and four are overvalued. Four have "buy" ratings and three have "hold" ratings. The biggest gainer over the last 12 months is Constellation Brands up 89.4%. Projected 12 month gains are up 5.1% to 9.7%. The 12 month trailing price-to-earnings ratios appear elevated with five of eight having price-to-earnings ratio between 21.6 and 84.2.


july4 adult beverages
Reading the table:

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

 

Ambev (ABV) ($36.47) the beer and soft drink provider set a multi-year high at $47.17 back on Jan.31. My weekly value level is $35.89 with a semiannual pivot at $36.94 and monthly risky level at $41.91.


Beam (BEAM) ($63.70) provides distilled spirits including bourbon, scotch, vodka, rum and my favorite tequila. The stock set a multi-year high at $69.05 on May 15. My weekly pivot is $63.85 with a monthly risky level at $68.64.


Craft Brew Alliance (BREW) ($8.42) brews and markets several brands of craft beers. The stock set its 2013 high at $8.72 on Tuesday. My monthly value level is $6.90 with a weekly pivot at $7.81.


Anheuser-Busch Inbev (BUD) ($89.39) is the premier provider of nearly 200 brands of beer. The company is now headquartered in Belgium, and Belgium beers are my oldest son's favorites. If you like a Bud, this stock is for you. The stock traded to a 2013 low at $83.94 on June 24 and tested its 200-day simple moving average at $90.90 on Monday. My semiannual value level is $80.01 with a weekly pivot at $89.70 and monthly risky level at $99.66.


Boston Beer (SAM) ($174.35) is the brewer of nearly 50 flavors of Samuel Adams. The stock set a new multi-year high at $176.47 on Tuesday. My quarterly value level is $167.38 with a weekly pivot at $170.03 and semiannual risky level at $193.55.


Constellation Brands (STZ) ($51.25) produces wines and spirits including the popular Robert Mondavi brands. The stock set a new multi-year high at $54.64 on May 30. My quarterly value level is $47.83 with a weekly pivot at $53.71 and monthly risky level at $54.02. The weekly pivot provided a risky level following the stock's lower open on Tuesday.


Molson Coors Brewing (TAP) ($48.07) produces many of the popular beer brands including Heineken, Amstel Light and Miller Lite. The stock set a multi-year high at $53.35 on May 17. My quarterly value level is $44.70 with a semiannual pivot at $47.92 and monthly risky level at $50.04.


At the time of publication the author held no positions in any of the stocks mentioned.


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