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Beverage stocks to invest in Q2 2023
Table of Contents
In our stock insights, we’ll cover four consumer staple categories. Consumer staples stocks are fairly long, so we’ve divided them into categories to help you find what you’re looking for, starting with beverage stocks.
Why should you invest in consumer staples stocks? Staple items are things you cannot (or won’t) live without. The stability of consumer staples can be attributed to the fact that consumers will seek out staple items when times get tough, avoiding discretionary items (things that you want but that are not necessary to your lifestyle) and that is what gives staple items their stability.
Beverage Products Companies
In spite of economic fluctuations, consumer staple beverage companies are known for generating steady profits and revenues. There are several types of beverages commonly considered staples, such as bottled water, coffee, tea, juice, soda, and energy drinks.
Typically, the category holds on to its pillar beverage companies as they are solidly established brand names with fierce customer loyalty.
Monster Beverage Corp (MNST:NYSE)
Monster Beverage Corporation is a well-known American energy drink company that produces a variety of energy drinks (Monster Energy, Relentless, and Burn) brewed coffee, hydrating sports drinks, juices, and teas.
As April 11, 2023, Monster Beverage Corp had a $54.9B market capitalization, putting it in the 97th percentile of companies in the Non-Alcoholic Beverages industry.
At present, MNST is trading at $52.35. The consensus rating of 17 analysts named the stock ‘Strong Buy’ with an average price target of $52.35., an upside trend of 65.69%. Along with a high forecast of $125.00 and a low forecast of $50.00
Primo Water Corporation (PRMW:NYSE)
Primo Water Corporation is a Canadian-American company providing pure-play water solutions to residential and commercial customers. Aside from bottled water, they also produce self-service refill water machines, water dispensers, and water filtration appliances.
As of April 2023, Primo Water had a $2.38B market cap. Putting Primo Water in the 74th percentile of Non-Alcoholic Beverages companies, this ranks the company as the 3488th most valuable company in the world by market cap.
At present, PRMW is trading at $14.94. Analysts named the stock ‘Moderate Buy’ with an average price target of $18.38 an upside trend of 23.03%. Along with a high forecast of $21.00 and a low forecast of $16.00.
First Quarter 2023 Earnings Conference Call – Thursday, May 4, 2023 at 10:00 a.m. EST. The company is expected to post $0.13 earnings per share (EPS) for Q1 2023, according to Jefferies Financial Group.
You can never leave beverage stocks without the world’s favorite soda brand, Coaca-Cola. It is also Warren Buffet’s personal pick stock. The company not only serves the largest beverage brand in the world but on a wide range of other drinks including Minute Maid juice, alternative beverages such as Powerade, and a stake in Monster Beverage (NYSE:MNST).
Coca-cola also partners with other beverage businesses such as Monster Energy, Edrington, Brown-Forman, and Campari to sell their products in Coca-Cola’s distribution markets. The company also branched out its game by acquiring Costa Coffee for $5B in 2019.
KO is currently trading at $62.69. The consensus rating of 12 analysts named KO as ‘Strong Buy’ with an average price target of $68.27 and a positive trend of 8.9%. Along with a high forecast of $74.00 and a low forecast of $61.00.
The stock had a 16.78% increase over a duration of 6 months and 64.93% rise in 5 years.
A significant advantage of Pepsico compared to Coca-Cola is that it has expanded into the food and snack sector. Aside from owning beverage brands such as Pepsi, Mountain Dew, and Gatorade, PepsiCo is also the owner of Frito-Lay snack brand and Quaker Foods. The acquisition of Quaker for $13.4B back in 2010 has made it possible for the company to gain further exposure to the supermarket channel, which has been booming during the recent pandemic.
Currently trading at $183.20, PEP is rated ‘Moderate Buy’ with an average price target of $188.56 and a positive trend of 2.93%. Along with a high forecast of $205.00 and a low forecast of $175.00.
In the past 6 months, the stock price has increased by 14.14%, and in the past five years, the stock has increased by 93.86%.
Celsius Holdings (CELH:NYSE)
Another energy drink on the list is Celsius Holdings. Celsius is primarily known for its functional drinks and liquid supplements that claim to promote energy metabolism and help consumers reach their fitness goals. The company also offers post-workout functional energy drinks and protein bars.
The stock jumped 1807.89% in just 3 years, the increase seemed to be contributed by the pandemic since it had mastered in direct-to-consumer approach. Celsius Holdings’ revenue sees a continuos incline as annual revenue for 2022 was $0.654B, a 107.97% increase from 2021. Celsius Holdings’ annual revenue for 2021 was $0.314B, a 140.41% increase from 2020.
At a current price of $87.00, CELH is rated ‘Strong Buy’ by Analysts. It has an average price target of $117.57 and an upward trend of 35.14%. Along with a high forecast of $130.00 and a low forecast of $98.00.
As far as portfolio exposure to liquor is concerned, it is hard to think of a better choice than Diageo, which is the umbrella brand for well-known brands such as Johnnie Walker, Crown Royal, Smirnoff, Bailey’s, and Captain Morgan. There has been no doubt that Diageo has been a profitable company for many years, owing to its strong portfolio of loyalty-inspiring brands in an industry with few entries.
At present, DEO is trading at $184.69. Analysts named the stock ‘Moderate Buy’ with an average price target of $225.00 and an upside trend of 21.83%.
The leading coffee brand has an important growth catalyst that doesn’t get enough attention when it comes to its growth potential. Starbucks had been a strong dividend stock player and over the last five years, share prices of SBUX have nearly doubled with a significantly outperformed the S&P 500 index. In five years, there’s a good chance of another similar run.
Starbucks puts its products on store shelves alongside well-known consumer brands, and it’s even selling them on Amazon. In response to this, Starbucks started producing their Starbucks Home range, Starbucks drink in a can, Nespresso pod as well as something that cannot be beat – their merchandise. This is a great opportunity, as it complements the demand for customers who may not frequent Starbucks coffee shops regularly.
At present, SBUX is trading at $104.74. According to analysts, the stock is a ‘Moderate Buy’ with an average price target of $115.42 and an upside trend of 10.20%. Along with a high forecast of $130.00 and a low forecast of $98.00.
Many beverage companies have established brand names and loyal customers, so they’re more protected against competition. Having a strong sense of security can make companies more attractive to investors who are looking for companies with long-term growth potential and stability.
The key takeaways/market update is a series by AxeHedge, which serves as an initiative to bring compact and informative In/Visible Talks recaps/takeaways on leading brands and investment events happening around the globe.
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None of the material above or on our website is to be construed as a solicitation, recommendation or offer to buy or sell any security, financial product or instrument. Investors should carefully consider if the security and/or product is suitable for them in view of their entire investment portfolio. All investing involves risks, including the possible loss of money invested, and past performance does not guarantee future performance.
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