Amidst the growing health concerns and expanding popularity of reviving beverages, the beverage industry is expected to grow. Therefore, quality beverage stocks, The Coca-Cola Company (KO), Anheuser-Busch InBev SA/NV (BUD), and National Beverage Corp. (FIZZ) might be ideal buys.
With an increasing inclination over the previous several years, non-alcoholic beverages now account for more than 50% of the worldwide beverage industry. Due to the expanding popularity of reviving beverages and the advancement of civilization throughout human civilizations, the market provides investors with a comprehensive perspective of the industry.
In line with this, the increasing product demand can also be attributed to rising consumer health consciousness and the growing participation in sports and allied activities, increasing the need for instant energy, preventing dehydration, and improving overall health. IMARC Group expects the global functional beverages market to reach $205.10 billion by 2028, exhibiting a CAGR of 6.8% until 2028.
Additionally, the plant-based beverages market is driven by factors such as the increased demand for vegan food options amidst the growing health concerns about the consumption of animal-based diets. The plant-based beverages market is projected to reach $19.67 billion by 2023, growing at a CAGR of 12%.
Let’s discuss the stocks mentioned above in detail:
The Coca-Cola Company (KO)
KO is a beverage giant that operates through segments, including Europe, the Middle East, and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments. It owns and markets five non-alcoholic sparkling soft drink brands, and its products are sold in more than 200 countries.
KO’s trailing-12-month EBIT margin of 28.13% is 321.9% higher than the 6.67% industry average, while its trailing-12-month gross profit margin of 58.09% is 85.2% higher than the industry average of 31.36%.
KO pays a $1.84 per share dividend annually, translating to a 3.01% yield on the current share price. Its four-year average dividend yield is 3.02%. Over the last three years, KO’s dividend payouts have grown at a 3.6% CAGR.
KO’s net operating revenue increased 7% year-over-year to $10.98 billion in the first quarter that ended March 31, 2023. Its gross profit grew 4.4% from the year-ago quarter to $6.66 billion, while its net income per share increased 24.1% year-over-year to $0.72.
KO’s revenue is expected to increase 3.7% year-over-year to $11.72 billion in the fiscal second quarter that ended June 2023. Its EPS is expected to grow 2.7% year-over-year to $0.72 in the same quarter. It surpassed EPS and revenue estimates in all four trailing quarters, which is impressive.
KO’s shares gained 8.5% over the past nine months to close the last trading session at $60.56.
KO’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating equates to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
KO has a B for Stability and Quality. It is ranked #18 out of 36 stocks in the A-rated Beverages industry.
Click here for the additional POWR Ratings for Growth, Value, Sentiment, and Momentum for KO.
Anheuser-Busch InBev SA/NV (BUD)
Headquartered in Leuven, Belgium, BUD produces, distributes, markets, and sells beer and beverages.
BUD’s trailing-12-month EBIT margin of 24.88% is 273.1% higher than the 6.67% industry average, while its trailing-12-month gross profit margin of 54.34% is 73.3% higher than the industry average of 31.36%.
BUD pays a $0.82 per share dividend annually, translating to a 1.45% yield on the current share price. Its four-year average dividend yield is 1.62%.
During the fiscal first quarter that ended March 31, 2023, BUD’s revenue stood at $14.21 billion, up 13.2% year-over-year, while its gross profit and earnings per share grew 12.4% and significantly from the prior-year quarter to $9.50 million and $0.81, respectively.
Analysts expect BUD’s revenue to increase 5.1% year-over-year to $15.54 billion in the fiscal second quarter ended June 2023. Its EPS is expected to grow marginally year-over-year to $0.76 in the same quarter. It surpassed EPS estimates in each of the four trailing quarters.
Over the past nine months, the stock has gained 21.3% to close the last trading session at $55.33.
BUD’s POWR Ratings reflect its solid outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
In addition, BUD has a B grade for Stability. It is ranked #19 within the same industry.
Click here to get additional BUD ratings (Value, Sentiment, Momentum, Quality, and Growth).
National Beverage Corp. (FIZZ)
FIZZ develops, produces, markets, and sells a portfolio of sparkling waters, juices, energy drinks, and carbonated soft drinks, primarily in the United States and Canada.
FIZZ’s trailing-12-month EBIT margin of 15.92% is 138.7% higher than the 6.67% industry average, while its trailing-12-month gross profit margin of 33.83% is 7.9% higher than the industry average of 31.36%.
For the fiscal fourth quarter ended April 29, 2023, FIZZ’s net sales increased marginally year-over-year to $286.70 million, while its net income rose 5.7% from the prior-year quarter to $36.30 million. Earnings per common share increased 18.2% year-over-year to $0.39.
Street expects FIZZ’s revenue to increase 3% year-over-year to $327.66 million in the fiscal first quarter ending July 2023. Its EPS is expected to grow 38.4% year-over-year to $0.53 in the same quarter. It surpassed EPS estimates in three of the four trailing quarters.
The stock has gained 24% over the past nine months to close its last trading session at $50.48.
FIZZ’s robust fundamentals are reflected in its POWR Ratings system. The stock has an overall B rating, equating to Buy in our proprietary rating system.
FIZZ has a grade of A for Quality and a B in Stability. FIZZ ranks #14 within the same industry.
For additional POWR Ratings for FIZZ (Value, Growth, Sentiment, and Momentum), click here.
Is the Bear Market Over?
43 year investment veteran Steve Reitmeister shares his updated stock market outlook & top picks for the rest of 2023. Spoiler Alert: Steve still believes the bear case most likely.
Get Stock Market Outlook & Top Picks >
KO shares fell $0.04 (-0.07%) in premarket trading Friday. Year-to-date, KO has declined -3.43%, versus a 15.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Grab These 3 Beverage Stocks Today StockNews.com
