Will Molson Coors (TSX:TPX.B) Turn Out to Be the Stock of the Summer?

With warmer weather and the FIFA World Cup around the corner, could Molson Coors Canada Inc. (TSX:TPX.B)(NYSE:TAP) be one of the market’s top stocks this summer?

| More on:

It’s been, for the most part, a couple of sour months for investors in Molson Coors Canada Inc. (TSX:TPX.B)(NYSE:TAP).

Colder weather this spring helped to dampen beer sales in North America — an issue that was only made worse by the cycling of a tax credit enjoyed by European markets a year ago and destocking among North American distributors in the first quarter.

All that led to a disappointing result when Molson reported its first-quarter earnings at the beginning of May.

Analysts were expecting the company to report quarterly earnings of $0.78 per share; meanwhile, the beer brewer, with headquarters based in Denver and Montreal, was only able to muster up a meager $0.48 per share.

That simply did not leave investors satisfied, and, in fact, it created a stampede for the exits, with Molson stock plummeting more than 15% in a single day’s trading.

But as they say, “one man’s junk is another man’s treasure.” While some may have been unnerved by the disappointing quarterly results, shares now trade just above their lowest levels in nearly three years.

In fact, at a share price now in the mid-$60s, Molson stock is now trading at the same price it did all the way back in 2007.

It’s hard to believe, especially given that Molson happens to be one of the world’s largest alcoholic beverage brewers and boasts an impressive staple of popular brands among its product lineup.

In Canada, Molson Coors lays claim to such popular beer brands as its namesake Coors, Coors Light, and Molson Canadian labels, as well as the Miller, Miller Lite, and Carling brands.

Over time, beer drinkers have begun gravitating somewhat away from their “dad’s beers” like the aforementioned brands and picking up the brews of smaller, lesser-known labels.

But today, Molson Coors now offers some of those brews, like, for example, Blue Moon, Creemore Springs, Granville Island, and Mad Jack.

One of the other trends that has become apparent in the beer markets lately is a divergence to alt-beers, such as low-calories beverages like Molson Canadian 67 and non-traditional flavours, including ciders.

Not to mention that last year Molson Coors acquired full ownership of its outstanding stake in the Miller Coors joint venture — a move that saw Molson Coors acquire full ownership of the Miller portfolio outside the U.S. and allow it to retain the rights to all brands within the Miller Coors portfolio within the U.S. market.

Going to be a good summer?

Despite the rocky first-quarter results, management remained confident that it will be able to recoup those losses through the back half of the year.

With the FIFA World Cup and warmer, beer-drinking weather just around the corner, now could be a good time to be loading up on the stock of Molson Coors.

Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jason Phillips owns the MOLSON COORS CANADA INC. 60-strike January 2019 calls, CL.B, NV. The Motley Fool owns shares of Molson Coors Brewing.

More on Investing

funds, money, nest egg
Investing

Retirees: 3 Canadian Stocks You Can Confidently Own for the Next 20 Years

Here's why retirees need to plan beyond 20 years in retirement. Fortis Inc. (TSX:FTS), Royal Bank of Canada (TSX:RY) stock…

Read more »

Question marks in a pile
Tech Stocks

Should You Invest in Absolute Software Stock Right Now?

Absolute Software (TSX:ABST) is a tech stock that is worth your attention, as it offers exposure to exciting security markets.

Read more »

Dividend Stocks

1 Oversold Dividend Stock I’d Buy in December 2022

Here’s one of the best Canadian dividend stocks to buy in December that I find undervalued.

Read more »

Investing

FOR TUESDAY – 3 TSX Stocks to Buy Today and Hold for the Next 3 Years

Given their growth prospects, these three TSX stocks could outperform over the next three years.

Read more »

Supermarket aisle with empty green shopping cart
Stocks for Beginners

Is Dollarama Stock a Buy at All-Time Highs?

Dollarama stock (TSX:DOL) remains at all-time highs while the rest of the market drops. Does this mean it's due to…

Read more »

Online shopping
Tech Stocks

Should You Buy Shopify Stock If the Rate Hike Cycle Slows?

Is SHOP stock a buy after its 72% drop this year?

Read more »

A bull outlined against a field
Investing

2 Canadian Stocks Set to Soar in a New Bull Market

Consider Sleep Country Canada Holdings (TSX:ZZZ) stock and another mid-cap bargain, as the bear market moves on.

Read more »

Gold bars
Metals and Mining Stocks

Better Buy: Newmont or Barrick Gold Stock?

If you think better days are ahead for gold miners, consider exploring gold stocks Newmont and Barrick Gold.

Read more »