St. Patrick’s Day 2020 proved to be a brief respite from the doom and gloom of late as the markets recovered some of their staggering losses
As I type this story out from the isolation of my home, not a hangover in sight, it is with great joy that I can bring a refreshing story from my country’s national holiday.
I’m not going to lie, it has been a gloomy few weeks, putting it mildly, and when I woke up to the news that the greatest quarterback of all time, Tom Brady, was leaving the Patriots, I thought I was in for yet another miserable day in isolation-land. Not only that, but there were no celebrations, no parades, not even a pint of Guinness for me to brandish in a patriotic salute to my nation’s proud history.
Despite this, somehow, against all odds, the alcohol industry still managed to perk me up. Not from the bottom of a glass, but from the little green numbers showing beside the tickers of some of my favorite alcohol stocks.
- Dry States: The Decline Of Alcohol In The U.S.
- While The Market Tanks, Amazon Goes On A Hiring Spree
- 4 Alcohol Stocks Feeling The Sting Of Declining Sales
Brown Forman Gets An Upgrade
You would think that the looming threat of large-scale bar closures would hurt Jack Daniel’s parent Brown Forman (NYSE: BF.B), but it appears that the reality runs contrary to this.
We’ve all seen the videos and pictures on Facebook (NASDAQ: FB) and Twitter (NYSE: TWTR) of hordes of panicked shoppers stuffing their cards and waiting in two-mile-long queues. However, it appears that they’re also buying alcohol too. Why didn’t I think of that?
Brown Forman’s stock jumped more than 14% on St. Patrick’s Day after analysts lowered earnings per share estimates for full-year 2020 to $1.75, and upgraded the stock from a ‘sell’ rating to ‘hold’. According to CFRA analyst Garrett Nelson:
“While sales to restaurants are likely to suffer, we think stay-at-home trends bode positively for alcohol consumption trends”.
Brown Forman shares are down roughly 18% in the past month, compared with the S&P 500’s (NYSEARCA: VOO) 25% loss in the same period.
Boston Beer’s Big Break
Another unlikely beneficiary of a relatively dry St. Patrick’s Day was Sam Adams parent Boston Beer (NYSE: SAM), which rose nearly 14% on the news that MKM analysts had moved the stock to a ‘buy’ rating.
The decision comes after analyst Bill Kirk laid out the theses that beer brands do relatively well during times of economic downturn. Boston Beer has also fallen 18% in the past month, but according to Kirk:
“As long as grocery stores and liquor stores remain open, we don’t expect aggregate beer volumes to be meaningfully impacted.”
If the New England Patriots were a publicly-traded company, the Tom Brady news probably would have sent its stock to zero, so it’s nice for the city of Boston to get a win, especially on Paddy’s Day.
Other alcohol stocks making moves
Another alcohol stock that was in the green yesterday — pun intended — was Budweiser parent Anheuser Busch Inbev NV (NYSE: BUD), which rose more than 2%. The world’s largest brewer announced that it had taken out its entire $9 billion loan facility to stave off the effects of the coronavirus, as Earth’s leaders urged people to stay away from bars and restaurants.
The company has been in need of a break, as its association with the Corona Beer brand has, incredibly, hurt its stock badly recently. Anheuser stock has fallen more than 40% in the past month alone. It took some people quite a while to figure out that corona beer was in no way affiliated with coronavirus, which is not a sentence I expected to write at any point in my career…
It has not been an easy time for anyone as of late and even though there is a lot to be negative about, we must also focus on the positives. Other brands such as Guinness owner Diageo (NYSE: DEO) could expect to make massive losses yesterday, seeing what is normally its busiest day of the year canceled. However, its stock remained relatively flat, unlike a proper pint of the ‘black stuff’, as we call Guinness here.
It’s going to be a rough few months, but there’s no reason we can’t all look on the bright side every now and again.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.