This week marks the beginning of summer. Based on the temperatures being recorded in the Northeast and the rising tension in Europe, it looks like it is going to be one long, hot summer. Since nothing is better on a hot summer day than a nice cold beer, maybe it is time to look at a high yielding brewer with low valuations that looks like it is providing investors a good entry point at current price levels: Molson Coors Brewing Company (TAP).
5 Reasons there is nice value in TAP at $38 a share:
- The stock is selling at the very bottom of its five year valuation range based on P/E, P/CF and P/B.
- The company pays a solid 3.2% dividend and has raised dividend payouts at a 17% annual clip over the past five years.
- The stock is cheap at just 90% of book value and just over 10 times forward earnings, a discount to its five year average (13.2).
- The stock from a comparative basis is priced way under one of its biggest competitors, Anheuser Busch (BUD). Molson has a much lower P/E, price to sales ratio and pays a much higher dividend than its larger cousin.
- The stock has bounced from these levels previously and has good technical support here (see chart).
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TAP over the next 72 hours.