Molson Coors: Like Watching Beer Dry

| About: Molson Coors (TAP)

You've heard the old saying about value investing being like watching grass grow or paint dry? When it comes to portfolio holding Molson Coors (NYSE:TAP), we can add that value investing can be like watching beer dry.

Molson Coors was recommended on my blog in June 2005 at $60.35. The stock had dropped because the merger between Coors and Molson wasn't going as smoothly as planned. Beer sales in the US were flat (pun intended) and a price war between Coors, Budweiser and SABMiller was looming and would hurt profits. Molson, which is hugely popular in Canada, had slower sales due to the NHL being on strike (Molson is a big sponsor of hockey). The company also had some problems with its UK assets and a lousy-performing beer business in Brazil (which it subsequently sold).

All of these were short-term challenges. Molson Coors has good management under CEO Leo Kiely. The company wasn't going to go out of business. It was unloved on Wall Street, but so what.

The stock closed yesterday at $76.76. That's a gain of more than 28%, not including dividends. No, that's not a homerun. But it is a respectable, if not spectacular, return on investment. And if every stock would do as well I'd be delighted. I should point out that Molson Coors has been in the portfolio for 18 months, and with my 3-to-5 year time horizon there's still plenty of time for things to go wrong.

I don't expect that to happen. Yet with the shares recently hitting new highs, we could always see a pullback.

I'm writing about Molson Coors because, well, I haven't mentioned it much since buying it. This is a case of a company and its management quietly working things out and growing the bottom line over time. It may not be exciting. But it sure is profitable.

TAP 1-yr chart:

TAP 1-yr chart