The Canadian economy had just started its dramatic plunge when the government began instituting lockdowns in March. At the time, I’d discussed what stocks were capable of weathering and even thriving during a recession. The alcohol industry has long been considered more resilient than most during periods of economic turbulence. Today, I want to look at three TSX stocks in this space that I’m excited about heading into the fall.
Provinces have vowed to take a regional approach to containing the COVID-19 outbreak in the weeks and months ahead. Flu season is now bearing down on the population. This phenomenon, combined with the ongoing pandemic, has policymakers scrambling to prevent a catastrophe. Many Canadians may be forced back into lockdown mode as the weather cools. Just as before, this will likely result in more alcohol consumption.
Why this TSX stock can quench your thirst this fall
Waterloo Brewing (TSX:WBR) is engaged in the production, distribution, and sale of alcohol-based products. This company is the largest Canadian-owned brewer in Ontario. Waterloo’s most successful brand is Laker, but it also operates others like LandShark Lager and the beer that carries its namesake: Waterloo Brewing.
Shares of this TSX stock have increased 16% in 2020 as of close on September 24. The stock is up 40% over the past three months. In Q2 2020, Waterloo Brewing saw net revenue increase 44.4% to $24.6 million and EBITDA climbed 61.5% to $5.8 million. Revenue growth has expanded 34.3% in the year-to-date period by the end of the second quarter.
The board of directors last approved a quarterly dividend of $0.2625 per share. This represents a 2.6% yield.
Bet on wine and spirits with this top dividend stock
Corby Spirit and Wine (TSX:CSW.A) is a manufacturer, marketer, and importer of spirits and wines. Some of the top brands under its umbrella include Wiser’s whisky, Polar Ice Vodka, Lot 40 Canadian Whisky, and Royal Reserve. Its premium gin — Ungava — has enjoyed increased sales in recent quarters. Spirits and wines have seen their market share increase, while beer has waned over the past decade.
Investors got a look at its fourth-quarter and full-year results for 2020 on August 26. Net earnings for the full year increased 4% from 2019 to $26.7 million or $0.94 per share. Revenue increased 2% year over year on the back of improved performance for Corby-backed brands. It was also boosted by improved commissions from represented brands.
This TSX stock last possessed a P/E ratio of 16. This puts Corby in favourable value territory relative to industry peers. Better yet, it offers a quarterly dividend of $0.20 per share. This represents a strong 5.1% yield.
The last TSX stock that fits our framework
All the way back in February, I’d suggested that investors could snag Andrew Peller (TSX:ADW.A) at a discount. This Ontario-based company produces and markets wine, spirits, and wine-related products. The company released its first-quarter fiscal 2021 results on August 5.
Sales increased 3.4% from the prior year on the back of improved consumer purchasing patterns in the face of the pandemic. Like other retailers, Andrew Peller has bet big on its e-commerce offering. This paid off in Q1 FY2021. Meanwhile, EBITDA increased to $22.6 million — up from $18.4 million in Q1 FY2020.
This TSX stock last possessed an attractive P/E ratio of 17, putting it in very appealing territory relative to industry peers. It last approved a quarterly dividend of $0.215 per share. This represents a 2% yield.
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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CORBY SPIRIT AND WINE LTD CLASS A.