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

stock analysis
Investing

“GARP” Investing: 3 Can’t-Miss Stocks to Buy Now

goeasy (TSX:GSY) and other low-cost growth stocks could make your portfolio a market beater over the long run!

Read more »

calculate and analyze stock
Investing

My Take: The Best TSX Stock to Buy With $1,000 in March 2024

Here's why Restaurant Brands (TSX:QSR) remains a top TSX stock long-term investors should buy right now.

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

For growth and dividends this April, look to these two REITs that have quite the promising present as well as…

Read more »

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »