Molson Coors Beverage Company (TAP) is one of the world’s largest beverage companies, producing the highly recognized Coors, Molson, Miller and Blue Moon brands as well as numerous local, craft and specialty beers, explains Bruce Kaser, editor of Cabot Undervalued Stocks Advisor.
About two-thirds of its revenues come from the United States, where it holds a 24% market share. Investors worry about Molson Coors’ lack of revenue growth due to its relatively limited offerings of fast-growing hard seltzers and other trendier beverages.
Our thesis for this company is straight-forward — a reasonably stable company whose shares sell at an overly-discounted price. Its revenues are resilient, it produces generous cash flow and is reducing its debt.
A new CEO is helping improve its operating efficiency and expand carefully into more "growthier" products. The company recently reinstated its dividend.
Coca-Cola (KO) said it is expanding its partnership with Molson Coors to bring Topo Chico Hard Seltzer to Canadian markets starting next summer, following its initial success in the United States.
The stock remains cheap, particularly on an EV/EBITDA basis, or enterprise value/cash operating profits, where it trades at 8.1x estimated 2022 results, still among the lowest valuations in the consumer staples group and below other brewing companies. The stock remains a buy.
