Question: I have seen stories lately about Molson Coors Brewing Co. How about that as a stock investment?
Answer: You might not have expected Russians to be drinking Coors Light this winter, but this giant global brewer began distributing the beer in Moscow last year.
The company also entered a joint venture with China’s Si’hai Beer Co. to produce Coors Light and market it using a Chinese name that translates as “silver bullet.”
The Denver company, formed by the 2005 merger of Adolph Coors Brewing Co. and Canada’s Molson Inc., has cut costs and improved efficiency. Since 2008, it has had a joint venture, MillerCoors, with SAB Miller’s U.S. business.
With brands such as Molson, Coors, Carling, Keystone and Blue Moon, Molson Coors holds about 40% of the beer market in Canada, about 30% in the U.S. and nearly 20% in Britain.
But Molson Coors must compete against giants such as Anheuser-Busch InBev, which was formed when Belgium-based InBev acquired Anheuser-Busch.
The beer industry’s prospects depend heavily on the outlook for the restaurant industry, which is expected to show improvement along with the economy.
Because the beer market is mature and slow-growing, an evaluation of Molson Coors shares as an investment should include an assessment of whether it might be an acquisition target for another brewer.
Shares of Molson Coors recently were down about 8% this year, partially because of a drop in fourth-quarter earnings, after climbing 11% in 2010.
Last year, the company earned $708 million, down 1.8% from 2009. Sales rose 7.3% to $3.3 billion.
The consensus of analysts with ratings on Molson Coors shares is between “buy” and “hold,” with two “strong buy” ratings, five “buys” and seven “holds,” according to Thomson Reuters.
Question: I am a shareholder in the T. Rowe Price Blue Chip Growth fund. What is your opinion of its prospects?
Answer: It should provide no surprises, which is a good thing.
This $12-billion fund, which focuses on high-quality companies, has been managed by Larry Puglia since its 1993 inception. The T. Rowe Price fund family overall has a reputation for disciplined stock picking and relatively reliable returns.
The portfolio gained 31% in the last 12 months and had a three-year annualized return of 4%, results that ranked it in the top one-fourth and one-third, respectively, of funds that focus on large-capitalization “growth” stocks.
“This fund features market leaders well-positioned in their industries, such as Apple and Google, and is diversified among many companies,” said Katie Rushkewicz, mutual fund analyst with Morningstar Inc. “We consider it a good, long-term core holding for an investor.”
Other major stock holdings in the portfolio include Amazon.com Inc., Danaher Corp., Schlumberger Ltd., Franklin Resources Inc., Qualcomm Inc. and Starbucks Corp.
There’s no sales charge on purchases of fund shares, but one’s initial investment must be at least $2,500. The fund last reported that its expenses equaled 1% of its assets.