From The Stock Masters
Anheuser-Busch Companies, Inc. (NYSE:BUD) has been getting plenty of good attention lately including upgrades and being added to Warren Buffett’s portfolio just before the start of the year. You know if the Godfather of investing is picking up BUD, it’s got to be worth looking at. Cramer has hounded BUD for years and with the stock trading near its 52-week high it would appear they could do no wrong.
Just after Warren picked up his shares BUD, Anheuser-Busch received two upgrades in January and two this month. It’s even on the China bandwagon with BUD to double the number of Chi
nese cities where it sells its products, all the way up to 100 municipalities over the next five years. Beer is cool. A.G. Edwards upgraded BUD and said "Budweiser is showing gains in volume growth and marketing while buying back stock." I bet Homer Simpson would upgrade BUD shares if he were a Wall Street analyst. If only Homer could drink a Bud, he’d never touch Duff again. Even Homer can understand the benefit of buying a solid brand name like Budweiser. No matter how bad times get in America, people will always drink beer. In 2006 BUD sold 102 million barrels of beer in the U.S. and 22.7 million internationally. They report solid revenue every year and brought in $15.7B in 2006 and $15B in 2005.. They make the best commercials every Superbowl and more importantly, they can afford to buy the ad time during the whole game. So with shares trading near the 52-week high, why would you care about buying? During times of crisis and market despair, Beer is King, and who’s the King of Beers? You get the point. Hmmm, Beer.
If you are concerned the stock market is going to keep getting worse or a recession is on hand, BUD is your stock. Take it from Homer:
Beer… Now there’s a temporary solution.
You can even use Homer’s beer advice for help with those awkward father-son talks:
Bart, a woman is like beer. They look good, they smell good, and you’d step over your own mother just to get one!
Beer is the answer to all of man’s problems and it may be the cure if your stocks have taken a beating in recent weeks. But don’t listen to us, Christopher R. Growe from A.G. Edwards said BUD is poised for growth and it’s stock price is "cheap". Growe boosted his rating on the maker of Budweiser and Michelob to "Buy," from "Hold," pointing to a turnaround in fundamentals in the last nine months. He noted a recent run up in the stock price after rumors surfaced about a possible buyout, but discounted that possibility. Now that those rumors have subsided (like the head on a beer after it’s poured), Growe said: "the exuberance has clearly dissipated and the stock is back down to what we consider ‘cheap’ levels given the improved growth profile we foresee here." Let’s also keep in mind Christopher R. Growe worked at Anheuser-Busch for three years, so he may be playing for the home team, but still, perhaps that makes his analysis even more credible. Growe also said: "We look at improved volume growth trends as one of the alluring features here," he wrote, citing the recent acquisition of Rolling Rock and deals regarding imports and distribution of other beverages. "A very solid year of activity in 
our opinion and one that should help support improved volume growth alongside improved core brand performance following increased marketing investments and more ‘feet-on-the-street’." He also pointed to international growth, particularly in China, as a catalyst for Anheuser. Ah, another reason to toast when drinking beer, "To China and to Alcohol!"
Shares of BUD may be trading close to it’s 52-week high at around $50 per share, but like a good beer, its worth paying for the good stuff. Last month, Anheuser-Busch reported profit rose 31% in the fourth quarter on renewed growth in domestic beer sales. In the past few months, BUD reached import alliances with InBev, Grolsch, Kirin, Tiger and the Czechvar brand. It also bought the Rolling Rock brands and introduced its own internally developed specialty brands. This Bud Light ad says it all…
What more can I say after that, I’m thirsty for a Bud.
Article written by: Frank Lara Jr.
Article posted on: March 22nd, 2007
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