When Coca-Cola (NYSE: KO), Anheuser-Busch
InBev (NYSE: BUD), and Pepsico (NYSE: PEP) are
disappointing investors, that signals a new paradigm in the beverage sector.
Pepsico,
Anheuser-Busch InBev and Coca-Cola are still great companies with a place in
every portfolio. But what is becoming more obvious is that small-cap beverage stocks like Willamette
Valley Vineyards (NASDAQ: WVVI), Boston
Beer (NYSE: SAM),
and High Performance Beverages (OTC: TBEV)
have the most potential.
Coca-Cola,
Anheuser-Busch InBev and Pepsico are simply too big to deliver big growth
anymore.
For
the past five years, earnings-per-share growth for Coca-Cola was 9.00 percent.
Over the next five years, the analyst community expects it to be 5.55 percent.
It is the same story for PepsiCo. By contrast, earnings-per-share growth is
expected to be 21.16 percent next year for Boston Beer Company.
It
is becoming a niche market for consumer goods.
Related: Is
The Beverage Industry Now Like The High-Tech Sector?
Coca-Cola
and PepsiCo realize this and try to compete by gobbling up competitors. Most
mergers and acquisitions fail as too much is paid. It is also tough to
duplicate the secret sauce that results in a small-cap consumer company like
Boston Beer, Willamette Valley Vineyards, or High Performance Beverages carving
out its loyal following. With a Coca-Cola or a Pepsico, these just become
another product line. Or their own, they are the star performer receiving all
the best talent and resources.
Coca-Cola,
Anheuser-Busch InBev and Pepsico are not acquisition targets, either.
Niche
beverage companies like Boston Beer, Willamette Valley Vineyards or High
Performance Beverages could be. As a recent case in point, Anheuser-Busch InBev
just acquired Blue Point Brewing Company, a craft beer maker from Long Island.
A major part of Coca-Cola’s expansion campaign in China is focused on buying
niche entities in the country.
Anheuser-Busch
InBev, Coca-Cola and Pepsico are all down for 2014.
The
slow, steady growth of each and solid dividend income creates a role for those
beverage giants in the holdings of all investors. But the days of high growth
for Anheuser-Busch InBev, Coca-Cola and Pepsico are over. It is small caps in
the beverage sector like Willamette Valley Vineyards, Boston Beer Company and
High Performance Beverages that have more potential for growth, both in sales
and for the stock price.
Read more
Benzinga.com small-cap articles: http://www.benzinga.com/news/small-cap
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