Pernod Ricard Not Exactly Cheap, But Multiple Growth Drivers Are Attractive

You shouldn’t go into the alcoholic beverage sector looking for bargains; there are some here and there, but generally there are reasons for those and “undiscovered gems” are few and far between. Still, if you can get comfortable with “growth at a reasonable price”, maybe Pernod Ricard (OTCPK:PDRDY) (“Pernod”) is worth a look. While the stock is more expensive than I’d like from a cash flow perspective, the high margins can support a healthy forward EBITDA multiple, and I like the multi-pronged growth opportunities that Pernod Ricard has.

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Pernod Ricard Not Exactly Cheap, But Multiple Growth Drivers Are Attractive

Investopedia: Rumors About A Diageo-Beam Tie-Up Are Interesting, But Not Too Likely

December is the season for rumors in the financial markets, as there's relatively little actual news for reporters and columnists to discuss. With that in mind, a weekend piece in Britain's Sunday Telegraph regarding a potential merger between Diageo (NYSE:DEO) and Beam (Nasdaq:BEAM) should be taken with more than a few grains of salt.

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http://www.investopedia.com/stock-analysis/2012/Rumors-About-A-Diageo-Beam-Tie-Up-Are-Interesting-But-Not-Too-Likely-DEO-BEAM-BF-B-PDRDY1212.aspx

Investopedia: Brown-Forman May Struggle To Keep This Premium

When times get tough, investors will hit the bottle. Although sales of beer and spirits aren't quite as invulnerable to economic conditions as some investors like to believe, they are a lower-beta product category. All of that said, and allowing for the good success seen lately in promoting new internally-developed products and boosting margins, it's hard to see how Brown-Forman (NYSE:BF.B) keeps its elevated premium for the long haul.

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http://www.investopedia.com/stock-analysis/2012/Brown-Forman-May-Struggle-To-Keep-This-Premium-BF-B-DEO-BEAM-PDRDY1207.aspx

Investopedia: Diageo Lives Up To Its Billing

I may not love the premiums that alcoholic beverage companies carry today, but I can't fault the underlying premise that these companies pay for their multiples with solid and relatively consistent performance. To that end, while British alcohol giant Diageo (NYSE:DEO) saw some modest erosion in second half growth, the company's performance continues to offer both a port in a storm and leverage to emerging market growth. Once again, though, the question is whether investors ought to pay up for it.

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http://stocks.investopedia.com/stock-analysis/2012/Diageo-Lives-Up-To-Its-Billing-DEO-BUD-KO-PEP0824.aspx

Investopedia: Premium Spirits Drive A Premium Valuation for Beam

With bad news seemingly rolling in every day about the economic conditions in one part of the world or another, I can understand the flight to quality/consistency that has pushed up some well-known names. But while I understand the appeal of a stock like Beam (NYSE:BEAM), I still don't want to overpay for an asset that is unlikely to bail me out with exceptional growth. So while Beam is certainly a global spirits company worth watching, it will have to pull back a fair bit before the valuation looks truly appealing.

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http://stocks.investopedia.com/stock-analysis/2012/Premium-Spirits-Drive-A-Premium-Valuation-For-Beam-BEAM-DEO-BF-B-STZ0531.aspx

Investopedia: Can Diageo Keep The Party Going?

Right now is a pretty good time to have a global business with valued brands and pricing power. Recent years have proven that demand for spirits is not as inelastic as once conjectured, but Diageo (NYSE:DEO) has nevertheless been a popular stock in a nervous market. Curiously, even as the investors in 2012 have shown more interest in risky names, Diageo has maintained its momentum. The question for investors is how much room is left in this run.

A Strong Fiscal First Half  
So far, so good when it comes to Diageo's relatively ambitious targets for 2012. Organic revenue grew 7% for the first half and while the quarter-by-quarter performance was a little unbalanced (almost twice as much growth in the first quarter), underlying growth was consistent in both. As was the case for Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP), 3% volume growth seems like the magic number this quarter.

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http://stocks.investopedia.com/stock-analysis/2012/Can-Diageo-Keep-The-Party-Going--DEO-KO-BUD-BEAM0213.aspx

Investopedia: Central European Distribution - From Russia, With Disappointment

Although the Russian character is suffused with a grim fatalism, there is also a strong history of resilience in the face of adversity and an unwillingness to back away from a challenge. Though Central European Distribution (Nasdaq:CEDC) is technically an American company, this leading producer and seller of vodka in Russia and Poland may do well to take a page from its customers. While CEDC is a liquor company with real prospects for the future, it has just as many real problems in the present. 


A Bad End To A Hard Year
For much of 2010, Central European Distribution has better resembled the Gang That Couldn't Shoot Straight. Missed, and then lowered, guidance had been an issue throughout 2010 and there was always something else to blame - a cold winter, a hot summer, a tragic plane crash that killed Poland's president, other important government figures, and 96 people in total.

Maybe it should not have been surprising, then, that CEDC would miss again in the fourth quarter. Revenue dropped 11% for the final quarter and certainly missed estimates. This time the company pointed to production problems during the peak selling season as the culprit, but the company did note that volumes increased in Russia by 8% and the company stabilized (and then reversed) market share losses in Poland.


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http://stocks.investopedia.com/stock-analysis/2011/Central-European-Distribution-From-Russia-With-Disappointment-CEDC-DEO-LVMUY-PDRDY-BF.B-FO-PEP0307.aspx

Breakup Key For Fortune Brands?

Conglomerates are funny things. It seems that if a company can get large enough, say on the order of Danaher (NYSE:DHR) or United Technologies (NYSE:UTX), investors often make their peace with the corporate structure and go about their business. Smaller companies get quite a bit more scrutiny when they are in multiple business lines, though, and the peculiar combination of booze, golf clubs, faucets and front doors always seemed to fuel speculation that Fortune Brands (NYSE:FO) would eventually break itself up into its constituent parts. Years of speculation have finally come true, as the company announced Wednesday morning that it would launch just such a plan.

From One to Three
At this point, it seems as though the board of directors at Fortune Brands has only really decided on the big-picture aspects of the plan. Fortune Brands itself will continue as a publicly-traded company focused on the spirits business. The home and security business (with its leading businesses in faucets, cabinets and doors) will be spun-off to shareholders and become a separate publicly-traded company. The fate of the golf business is less certain - the company will either spin this business off as another publicly-traded entity or sell it outright.

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http://stocks.investopedia.com/stock-analysis/2010/Breakup-Key-For-Fortune-Brands-FO-DEO-ELY-NKE-MAS-SWK-BF.B1209.aspx