SPECIAL ST. PATRICK’S DAY EDITION
Uncharacteristically warm weather for St. Patrick’s Day in the Midwest is making us look to the March 17 past time as an aggressive growth rank buy. Investing in the Irish, or jovial spirits makes for a good read this weekend. For more things Irish, check out this Irish ETF article. We wish you a safe and happy St. Patrick’s Day and hope that you will one day catch a leprechaun.
Molson Coors Brewing (TAP) is a Zacks #2 Rank (Buy) due to its recent earnings positive earnings surprise and increasing estimates.
Company Description
Molson Coors Brewing Company manufactures and sells beer and other beverage products. The company was formerly known as Adolph Coors Company and changed its name to Molson Coors Brewing Company in February 2005 as a result of its merger with Molson Inc. Molson Coors Brewing Company was founded in 1873 and is headquartered in Denver, Colorado.
Recent Blowout
You cannot call it “the luck of the Irish” when you have a 36% positive earnings surprise the way TAP did in its most recent quarter. Earnings foamed up over the top of the Zacks Consensus Estimate by a full $0.26 and help the stock bubble higher by 3.5% following the report.
The company brewed up $937 million in sales, $5 million more than expected and a “keg” sized increase from $835 million in the year ago period. I’ll drink to that kind of growth.
Estimates Increase
Analysts increased estimates for 2012 following the most recent earnings report. Moving from $3.61 in January to the present level of $3.67 isn’t exactly the pot o’gold that investors were looking for following the blowout. Analysts may still be hung-over from the two prior quarters of negative earnings surprises.
One Brand Stands Out This Weekend
While the Silver Bullet is the nickname of a Coors Light, it is also an affectionate moniker of the Ohio State Buckeyes who enter March Madness today. With at least two dozen other brands of adult beverages produced by TAP, a certain one may see an increase in flow through. George Killian’s Irish Red is the Colorado version of Irish beer that has its roots in the old sod.
From the website: “The original George brewed the first batch of Enniscorthy Ruby Ale, the inspiration for George Killian’s Irish Red. He just wanted a better beer to share with his friends.
He then founded Mill Park Brewery in Enniscorthy, Ireland, so he could share his ruby-colored ale with all of Ireland.”
Aggressive growth investors may think they are drunk when they see the valuation for TAP. At 11x both trailing and forward PE, TAP trades at a discount to the industry averages of 19x and 16x respectively. Value investors tend to appreciate the 0.9x price to book multiple, especially seeing as the industry average is a frothy 4.8x. Seeing a valuation of 2x sales would scare off some, but a strong liver is needed for the beverage industry multiple of 3x, which is more than double that of TAP’s 1.3x
The Chart
As we drink in the price and consensus chart for TAP, we see that analysts estimates seem to start off the earnings year as if they had a few too many Molson Canadians. As the year tapers off, and analysts switch to Molson Dry, expectations cool off. We believe a recovering economy will have more people toasting and downing some suds straight from the TAP. TAP is a Zacks #2 Rank (Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
This Week’s Aggressive Growth Zacks Rank Buy Stocks
Core-Mark (CORE) has strong earnings momentum and higher estimates making it a Zacks #1 Rank (Strong Buy). CORE is our aggressive growth Rank Buy for the Ides of March.
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Westlake Chemical (WLK) is a Zacks #1 Rank (Strong Buy) after posting six upside surprises in the last seven quarters and getting higher estimates for 2012.
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HiSoft Technology (HSFT) is a Zacks #1 Rank (Strong Buy) and following two consecutive earnings beat and higher earnings estimates.
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Stamps.com (STMP) is a Zacks #1 Rank (Strong Buy) and has had several straight earnings blowouts.
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