Invest in America’s Past Time – Beer
I’ve toyed with this idea for some time and recently started thinking there may actually be some validity to it. This idea that has had my head spinning (literally) for some time now is simple – invest in Americas past time, beer. I know what your thinking, Americas past time is baseball. Correct you are, but have you ever wondered what made baseball America’s game?
Just like you hear everyday, our economy is weakening and investors are frantically trying to find a safe place to park their money. Could beer stocks be this safe harbor? The idea is intriguing to say the least and is valid on many accounts. One of the most common sense approaches to investing in beer is simple, people drink in good times and in bad. Well, I decided to break down Anheuser-Busch Companies Inc. (BUD) to see if this approach is worth pursuing.
Currently, BUD is trading at 61.30 or 15.75 more than its 52 week low, which is not bad considering many companies are creating new 52 week lows on what seems like a daily basis. Bud P/E (price-earning ratio) is 21.63 and its EPS (earnings per share) is 2.83. All are respectable numbers, but a standout is their dividend history. Over the years, BUD has maintained a slow and steady dividend climb that currently yields 2.10%, which is better than my money market fund is returning. Although the stock has actually gone up compared to the S&P in recent months, the price may be inflated due to swirling take over rumors.
The numbers appear to be decent and the logic reasonable, however, I’m not sold on investing in this industry just yet. I like the idea of solid dividend growth and a business model that basically sells itself, but protecting my portfolio with single stocks is an idea that makes me nervous. What are your thoughts? What other industries have the potential to perform in bull and bear markets? $
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Comments
BUD may not stay so American. I believe the company InBev is looking to buy them. For now though another way to invest in them would be to buy Berkshire Hathaway which also holds American brands such as Coke and Proctor and Gamble. No dividend but I hear the guy that runs BH is a decent investor.
@ FFB – funny you say that, Smart Money has a Yes or No to invest in Berkshire Hathaway this month, both sides make compelling points. But your right, that guy is a decent investor : )
As a former liquor store clerk, I can say the following:
Coors Light sells more units than any other product hands down. Corona doesn’t sell as many units, but grosses about the same since they are only sold in bottle. Yuengling is in the top 5, but I can’t say too much about the Pennsylvania outside of the Northeast. Our store sold more Miller Lite than Bud, but I wouldn’t be surprised if that changes throughout the US. Wheat Bears are also good investments. Most come from microbreweries now, but watch out for the ones that go public.
@ Hancock – Coors? Really? That surprises me a little bit; I bet it’s because of the blue mountain trick! I agree with microbreweries that go public, I’m a sucker for them.
I’d say Intuit, who makes quicken…since people might be budgeting more. Also, any of the motorcycle, mo-ped companies because of the gas prices.
Of course, I’m purely speculating. I have no freakin’ clue. I’d say maybe the opposite of whatever my 401(k)is invested in.