Jeff Parent B. Eng. FCSI CIMAnheuser Busch Companies Inc.BUDDON'T BUYMay 31, 2018
The chart back to 2012 shows a move from $50 to $110. Now it is coming down. There has been a lot of volume at the higher range. He thinks there could be a lot of profit taking going on will the recent pullback. This is technically a bad sign that could trigger further selling down to $85. It needs to make a new high above $105 before he would become a buyer.
A great company, but Diageo offers higher margins. With BUD, you're betting on a turnaround story. Heineken or Carlsberg offer higher quality products, though pay skinny dividends. BUD has a debt issue, a product mix that doesn't work among many problems.
(A Top Pick May 12/22, Down 15.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with BUD has triggered its stop $46. To remain disciplined, we recommend covering the position at this time.
Stockchase Research Editor: Michael O'Reilly We reiterate this iconic brand as a TOP PICK. Growth in next year's earnings are expected to value the company at 15x earnings compared to peers at 19x. Management continues to exploit its low cost advantage and operational efficiencies. It trades at just 1.2x book value. We like that it has grown cash reserves while aggressively retiring debt. We continue to recommend at stop loss at $46, looking to achieve $65 - upside potential of 32%. Yield 0.81% (Analysts’ price target is $65.28)
Stockchase Research Editor: Michael O'Reilly Recently reported earnings support the ability of BUD to be able to pass along rising costs to consumers, making it a good inflation hedge. It continues to expand its product line beyond just its iconic beer and has established a strong brand affiliation with the NFL (whose league will begin again soon). Growth in next year's earnings are expected to value the company at 15x earnings compared to peers at 19x. It trades at just 1.4x book value. It has used prudently used some cash reserves to aggressively retire debt early. We recommend at stop loss at $46, looking to achieve $73 - upside potential of 33%. Yield 0.75% (Analysts’ price target is $73.00)
It has been a controversial stock because it has been losing market share. It was trying to get its Asian subsidiary public. People hoped a really good valuation on their Asian assets would help. They took a lot of debt on.
Long term, he wonders about their growth plans. Will they get into cannabis? Beer only grows by 1-2% per year. The dividend is decent. He expects it to be a quiet stock. Yield 2.4%.
The beer business is very competitive and very tough. This is a “steady Eddie”, good dividend type stocks, but you need to have growth in your portfolio because we haven’t seen any inflation yet.
Anheuser Busch (BUD-N) or Dollar Tree (DLTR-Q)?Given the choice, he would probably go with Anheuser Busch. Consumer spending has been a little bit suspect and he would tend to shy away from the purer play of consumer spending. Anheuser Busch would be more of a staple as opposed to a discretionary.
This is the wrong time of year for beer stocks and the volumes are down anyway. Demographic is younger people not drinking beer. BUD sees volumes picking up next year. These names are seen as a little more growth.
The chart back to 2012 shows a move from $50 to $110. Now it is coming down. There has been a lot of volume at the higher range. He thinks there could be a lot of profit taking going on will the recent pullback. This is technically a bad sign that could trigger further selling down to $85. It needs to make a new high above $105 before he would become a buyer.