Starbucks versus Molson Coors: Which is the Stock of Choice?

Beer or coffee? While the answer to this question might typically depend on what time of day it is, for investors, consumer stocks present some compelling choices.

Investors typically consider consumer staples as having more stable earnings than discretionary names do, Myles Zyblock, RBC Capital Market’s chief institutional strategist told clients in a note. And while this may be true at the sector level, he says it doesn’t always apply when you look at specific stocks.

He compared Starbucks Corp. (SBUX)(discretionary) and Molson Coors Brewing Co. (TAP)(staple), and found that the coffee chain’s earnings were surprisingly more stable. They have consistently trended upward since as early as 1993, while the brewer has experienced a much more bumpy ride for its earnings per share.

Mr. Zyblock said the recent sell-off for shares of Starbucks either points to the first substantial earnings growth downturn in 15 years or a possible buying opportunity.

SBUX vs. TAP 1-year chart: