Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
Login Archives Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
    ×
  • Subscribe
Enter stock ticker or keyword
×
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Buy, Sell or Hold

Buy, Sell or Hold: Is it Time for Investors to TAP into Molson Coors?

By David Mamos, Money Morning • April 18, 2013

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

Almost everyone has overindulged in a beer or three. And while that occasionally turns out to be something of a big mistake, the thirst for beer is hard to quench.

That's one of the reasons why I'm bullish about Molson Coors Brewing Company (NYSE: TAP).

Formed by the merger of Molson of Canada and Coors of the United States in 2005, this marriage joined two companies that have seen it all in the beer business--even to the point where their product was illegal during the days of prohibition.

Even still, both companies managed to not only survive but thrive.

Today, the descendants of the original founders still greatly influence Molson Coors and have a vested interest in the company's profitability and the incentive to keep the family legacies alive and well for future generations.

But that's only a small piece of why I like this company. The better reason is its ability to grow sales.

The Growing Need for a Cold One

In fact, Molson Coors reported a worldwide beer volume increase of 13.9% for 2012 and an increase of 15.3% for the most recently reported quarter. These volume increases translated into a sales increase of 9.9% for the year and 13.9% for the quarter.

Thanks in part to Coors Light overtaking Anheuser-Busch InBev's (NYSE: BUD) Budweiser as the number two beer in the country, the U.S. accounted for most of the gains as it posted a 1.7% increase in sales for the quarter to $1.78 billion.

However, it wasn't all rosy, Canadian sales dropped 7.5% to $471.5 million for the quarter, while in the U.K. sales declined 6.8% to $363.2 million from the prior-year quarter.

Management pointed to a number of issues for the lack of sales - from a new 20% excise tax on consumers in Quebec, to a lockout in the National Hockey League. How this will affect future sales remains to be seen.

But the truth is, Molson Coors has become about a lot more than just Canadian and U.S. sales. The company is also expanding overseas.

Stacking Kegs through Acquisition

Through a $3.5 billion acquisition of StarBev and its nine breweries in April 2012, Molson Coors has become a dominant player in the very attractive Central European beer market.

That's a big positive, since beer consumption per capita is expected to grow at a 3% rate in Central Europe for the next three years, and Molson Coors is ready to serve up several new premium brands, including the area's number one selling beer - Staropramen.

With the addition of StarBev, net sales for the 2012 fiscal year grew 11.4% to $3.92 billion compared with $3.52 billion reported the prior year.

Of course, Molson Coors is still in the midst of bringing StarBev into the fold by working out tactics to lower costs, pay down debt and extend key brands into the area, but a plan is currently in place that offers plenty of upside.

What's more, Molson Coors has kept a keen eye on emerging markets for possible growth with the wheels already set in motion for areas such as India, China, Russia and Latin America -all of which could be great growth areas for the company.

Of course this is not news to Molson Coors who, during its most recent conference call, touted how well it is doing outside the U.S. where it already has a foothold, and where it sees much more opportunity ahead.

Molson Coors Passes the Sobriety Check

Molson Coors does have one big elephant in the room though. Its biggest rival is Anheuser-Busch, which has a commanding 48% of the U.S. beer market.

If price wars between the two were to heat up, many worry that may put a dent in Molson Coors' bottom line. However, with micro-brews and craft-brews slowly gaining market share my guess is those premium beverages would take more of a direct hit in sales than Molson Coors as the consumer regresses back to the cheaper beers.

If, however, the trends still seem to show an increase in higher-grade craft brews, Molson Coors does have some "crafty-like" beers such as Blue Moon and the new Third Shift Amber Lager to promote. In fact, Goldman Sachs analyst, Judy Hong, believes that new products like these could eventually equate to 4% of the company's volume.

Speaking of volume, the company throws off a lot of cash as well.

In 2012, Molson Coors had a strong underlying free cash flow of $864.7 million. With that kind of cash on hand the company will be able to pay back its debt from acquiring StarBev in short order, while at the same time still being able to pay shareholders a nice per share dividend of $1.28 a year or a 2.6% annual yield.

Last Call

Even though Molson Coors may not be a prototypical growth company, it is demonstrating that it does have the ability to expand beyond the U.S. and Canada.

Sure, a lot is riding on whether the struggling economies around the world can rebound. But the company is a consumer staple with a healthy balance sheet, and I feel confident it won't be the baby thrown out with the bathwater when and if the markets stumble.

For those reasons I am a BUYER of Molson Coors.

[Editor's Note:If you have a stock you would like to see us analyze in a future issue, leave us a note in the comments below and we'll add it to our list.]

About the Author:David Mamos brings nearly 15 years of analytical experience to the table with a background ranging from big-picture fundamental analysis to highly technical trading decisions. He began his career working as a financial advisor with Royal Alliance in 2001 and helped clients with portfolio management as well as buy-sell decisions before transitioning to the development, implementation and execution of trading strategies for aggressive investors.

Related Articles and News:

  • Money Morning:
    Buy, Sell or Hold: Can Xerox Survive in a Paperless World?
  • Money Morning:
    Buy, Sell or Hold: Strong Oil Prices Make Apache Corp. a Good Bet
  • Money Morning:
    Buy, Sell or Hold: Why Wal-Mart Shares Are No Bargain
  • Money Morning:
    Buy, Sell or Hold: Strong Oil Prices Make Apache Corp. a Good Bet

[epom]

Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter

Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…

Claim My Free Report

Subscribe
Login
Notify of
guest

guest

0 Comments
Inline Feedbacks
View all comments


Latest News

September 18, 2023 • By Garrett Baldwin

Dogs That Are Fluent in Spanish for $200, Alex.

September 18, 2023 • By Shah Gilani

earnings
This Income Play Is a Perfect Hedge in a Sluggish Market

September 15, 2023 • By Shah Gilani

We're Headed for a Second Banking Crisis - Here's What to Do
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Penny Hawk Midday Momentum
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Quantum Data Profits Flashpoint Trader Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance L.A.U.N.C.H. Investor Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz