By Sean Lange February is the unsung month for celebrations. What it lacks in national holidays evoking season’s greetings or summer grill-outs, it makes up for with events that honor everything from romance to superstition; from sport, to history, to religion. It packs all of these tributes into the fewest days of any month of the year. The revelry in February regularly calls attention to an industry that had three companies break into Investor Business Daily’s list of the top twenty “Big Cap” companies to invest in during the new year: the beverage sector. Ranked among powerhouse companies like Alphabet, Caterpillar, and Facebook were Monster (NASDAQ: MNST), Constellation Brands (NYSE: STZ), and Brown Forman (NYSE: BFB), suggesting success on tap in 2018 for the makers and distributors of beer, wine, energy drinks, espressos, spirits, and soda. While the second month of the year doesn’t cater to the volume sales and peak quarterly earnings for beverage companies that June, July, or August do, or serve as the prosperous period for product testing like the months of November and December, the February calendar page doubles as extensive offering of opportunities to gain bottled brand loyalty. Especially, the Winter Olympics, running in 2018 from February 8th to the 24th in PyeongChang, South Korea, are quadrennial publicity showcases for adventure lifestyle-fueling beverage brands, like private label Red Bull and public corporation Monster Energy. Coming on the heels of the Winter X-Games each January in Aspen, Colorado, the Olympics are now inclusive of maximum air-coveting events. Competitors endorsed by Monster at the 2018 Games included 17-year-old American snowboarder and Women’s Halfpipe gold medalist Chloe Kim, and American skier David Wise, who took the gold medal in the Men’s Halfpipe. Monster, which markets highly caffeinated, “alternative energy” juices and sodas to extreme athletes, has watched its stock go up 66% year to date; and has seen its fluorescent logo brandished repeatedly to the average 22.3 million viewers of NBC’s Olympics broadcasts each night the past two weeks. Surprisingly, energy drinks aren’t the only beverages that have received significant television time during the PyeongChang Games. Watchers of multiple Olympics airings have no doubt seen the popular commercial run by Team USA sponsor Milk Life, the program formerly known by its tagline “Got Milk?”. The ad features U.S. halfpipe skier Maddie Bowman, and promotes how milk’s nutrients power her elite training. Alternatively, the dairy-industry advocacy may be more valuable for consumption on a different holiday. While not selling milk as a standalone beverage, Hershey [NYSE: HSY] uses it as an integral ingredient in its signature product and in its February sales success. The legendary candy maker prides itself on sourcing all of the dairy for its milk chocolate from farms within 100 miles of its Pennsylvania headquarters; and sales of its famous Bars, Kisses, and Reese’s Cups no doubt contributed to the record $19.6 billion spent by U.S. consumers on candy this Valentine’s Day. Hershey stock trades consistently around $100 and is projected for $3.66 EPS this year. On the other hand, Coca-Cola [NYSE: KO] made the most of February by spending almost $20 million, purchasing two ads across 90 seconds of air time during the Super Bowl LII broadcast. The brand has been a stalwart of Super Bowl commercial breaks for the past 12 years, having run highly anticipated ads that have customarily featured its polar bear mascots. The airtime gives Coca-Cola the chance to promote itself as an American brand, at a time where soda’s popularity is fizzing out. The maker of its namesake cola, Sprite, and Powerade recently cheered beats on quarterly revenues and EPS (at $7.51 billion and $0.39 cents) for the fiscal period ending this past January, in spite of slumping sales. President’s Day, celebrated on February 19th, might have provided another reason to look to the beverage sector -- to honor the nation’s forefathers. In particular, Thomas Jefferson is regarded as “America’s first wine connoisseur” by some U.S. historians, who recount that the fifth president once spent $7,500 in 1785 to meticulously import a cache of Bordeaux, Burgundy, and Rhone directly from France -- an expense that amounts to over $186,000 in 2018 currency. In homage to Jefferson, beverage distributor Constellation Brands saw its revenue grow 12% year-over-year in 2017 on the strength of distributing brands like Ruffino wines from Italy, Corona beer from Mexico, and Svedka vodka from Sweden. Earnings for the company, which are forecasted for 2018 at $8.53 per share on its current share price of $216, are projected to grow an average of 26% for each of the next three years. On the metaphorical end of the things, it may seem like Groundhog’s Day for Snapple: sold to Cadbury-Schweppes in 2000 and spun into its Dr. Pepper-Snapple division in 2008, the maker of tea and juice drinks will be moved again, to under the Keurig-Green Mountain [NASDAQ: GMCR] title, in the largest beverage acquisition in history. The deal, announced on February 1st, will create an $11 billion drink juggernaut, with revenues coming from coffee pod and grinds, and the Dr. Pepper, Snapple, Sunkist, and 7Up brands. Holiday imagery is also fitting for National Beverage Corporation [NASDAQ: FIZZ], which has grew its revenue 20% to $244 million in past quarter. The maker of LaCroix seltzer flaunts a purple and gold logo, reminiscent of the colors Mardi Gras, the Christianity-based celebrations that concluded with Ash Wednesday last week. Then, Brown Forman, the owner of brands like Jack Daniel’s whiskey and Herradura Tequila, has used its recent success -- its shares are up over 40% year-to-date, and it beat EPS and revenue expectations by 23% and 10%, respectively, in the previous quarter -- to boost many of its projections. The hard liquor-centric company has boosted 2018 earnings guidance from consensus $1.85 per share to a range of $1.90 to $1.98, and projects an average of over $900 million in net sales each quarter. On February 7th, the company also announced a 4:1 stock split in the form of a stock dividend, handing out one Class B share for every four shares of either Class A or Class B owned. Its stockholders are set to receive the additional shares on February 28th; and the timing couldn’t be more appropriate. February, too, carrying out its celebration, sometimes adds an extra day for its four weeks.
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