Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Beverages industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Beverages Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

3 Undervalued Beverages Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Beverages industry for Monday, November 04, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Beverages industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Fomento Económico Mexicano, S.A.B. de C.V.’s Value Grade

Value Grade:

Fomento Económico Mexicano, S.A.B. de C.V., through its subsidiaries, operates as a bottler of Coca-Cola trademark beverages. The company produces, markets, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil, Argentina, and Uruguay. It also operates small-box retail chain stores in Mexico, Colombia, Peru, Chile, and Brazil under the OXXO name; retail service stations for fuels, motor oils, lubricants, and car care products under the OXXO GAS name in Mexico; and drugstores in Chile, Colombia, Ecuador, and Mexico under the Cruz Verde, Fybeca, SanaSana, YZA, La Moderna, and Farmacon names. In addition, the company is involved in the production and distribution of collers, commercial refrigeration equipment, plastic boxes, food processing, and preservation and weighing equipment; and provision of logistic transportation, distribution and maintenance, point-of-sale refrigeration, and plastics solutions, as well as distribution platform for cleaning products and consumables. Further, it operates small-box retail and food convenience chain stores in Switzerland, Germany, Austria, Luxembourg, and the Netherlands under the k kiosk, Brezelkönig, BackWerk, Ditsch, Press & Books, avec, Caffè Spettacolo, and ok.–) names, as well as pretzels under the Ditsch name. The company was founded in 1890 and is based in Monterrey, Mexico.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Fomento Económico Mexicano, S.A.B. de C.V. has a Value Score of 64, which is considered to be undervalued.

When you look at Fomento Económico Mexicano, S.A.B. de C.V.’s price-to-sales ratio at 0.49 compared to the industry median at 1.93, this company has a lower price relative to revenue compared to its peers. This could make Fomento Económico Mexicano, S.A.B. de C.V.’s stock more attractive for value investors.

Fomento Económico Mexicano, S.A.B. de C.V.’s price-earnings ratio is 218.90 compared to the industry median at 24.40. This means it has a higher share price relative to earnings compared to its peers. This could make Fomento Económico Mexicano, S.A.B. de C.V. less attractive for value investors.

Now, let’s assess Fomento Económico Mexicano, S.A.B. de C.V.’s EV/EBITDA ratio, also known as enterprise multiple. At 10.9, when compared to the industry median of 15.4, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Fomento Económico Mexicano, S.A.B. de C.V.’s shareholder yield is higher than its industry median ratio of 2.10%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Fomento Económico Mexicano, S.A.B. de C.V.’s price-to-book ratio is lower than its industry median ratio of 3.07. This could make Fomento Económico Mexicano, S.A.B. de C.V. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Fomento Económico Mexicano, S.A.B. de C.V.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Fomento Económico Mexicano, S.A.B. de C.V.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 25.20. This could make Fomento Económico Mexicano, S.A.B. de C.V. more attractive because the lower P/FCF ratio indicates that Fomento Económico Mexicano, S.A.B. de C.V. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Coca-Cola FEMSA, S.A.B. de C.V.’s Value Grade

Value Grade:

Coca-Cola FEMSA, S.A.B. de C.V., a franchise bottler, produces, markets, sells, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Brazil, Argentina, and Uruguay. The company offers sparkling beverages, including colas and flavored sparkling beverages; waters; other non-carbonated beverages comprising juice drinks, coffee, teas, milk, value-added dairy products, sports and energy drinks, and plant-based drinks; and alcoholic beverages, such as hard seltzer under the Topo Chico brand name. It also distributes and sells Heineken, Estrella Galicia, Therezópolis, and Campari beer products, as well as Perfetti confectionary and chewing gum in its Brazilian territories; and Monster products. The company sells its products to distributors, retail outlets, wholesale supermarkets, discount and convenience stores, retailers, points-of-sale outlets, restaurants, bars, stadiums, auditoriums, theaters, and home deliveries. Coca-Cola FEMSA, S.A.B. de C.V. was founded in 1979 and is headquartered in Mexico City, Mexico.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Coca-Cola FEMSA, S.A.B. de C.V. has a Value Score of 95, which is considered to be undervalued.

Coca-Cola FEMSA, S.A.B. de C.V.’s price-earnings ratio is 15.7 compared to the industry median at 24.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Coca-Cola FEMSA, S.A.B. de C.V. more attractive for value investors.

Coca-Cola FEMSA, S.A.B. de C.V.’s price-to-book ratio is higher than its peers. This could make Coca-Cola FEMSA, S.A.B. de C.V. less attractive for value investors when compared to the industry median at 3.07.

You can read more about Coca-Cola FEMSA, S.A.B. de C.V.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Molson Coors Beverage Company’s Value Grade

Value Grade:

Molson Coors Beverage Company manufactures, markets, and sells beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers flavored malt beverages including hard seltzers, craft, spirits and energy, and ready to drink beverages. It provides its products under Aspall Cider, Blue Moon, Coors Original, Five Trail, Hop Valley brands, Leinenkugel's, Madri, Miller Genuine Draft, Molson Ultra, Sharp's, Staropramen, and Vizzy Hard Seltzer above premier brands; Bergenbier, Borsodi, Carling, Coors Banquet, Coors Light, Jelen, Kamenitza, Miller Lite, Molson Canadian, and Niksicko, Ozujsko under the premium brands; and Branik, Icehouse, Keystone, Miller High Life, Milwaukee's Best, and Steel Reserve under the economy brands. The company was formerly known as Molson Coors Brewing Company and changed its name to Molson Coors Beverage Company in January 2020. Molson Coors Beverage Company was founded in 1774 and is based in Golden, Colorado.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Molson Coors Beverage Company has a Value Score of 88, which is considered to be undervalued.

Molson Coors Beverage Company’s price-earnings ratio is 10.8 compared to the industry median at 24.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Molson Coors Beverage Company more attractive for value investors.

Molson Coors Beverage Company’s price-to-book ratio is higher than its peers. This could make Molson Coors Beverage Company less attractive for value investors when compared to the industry median at 3.07.

You can read more about Molson Coors Beverage Company’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Beverages Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Beverages stocks as well as other industrys.

Choosing Which of the 3 Best Beverages Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Fomento Económico Mexicano, S.A.B. de C.V. stock has a Value Grade of B.
• Coca-Cola FEMSA, S.A.B. de C.V. stock has a Value Grade of A.
• Molson Coors Beverage Company stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Beverages industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Beverages Stocks

Want to learn more about Beverages stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Beverages Stocks for Monday, November 04
• 3 Undervalued Beverages Stocks for Tuesday, October 29
• 3 Undervalued Beverages Stocks for Wednesday, October 23
• 3 Undervalued Beverages Stocks for Wednesday, October 09

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.