Americans drink a lot of wine—some 913 million gallons a year according to the Wine Institute. That works out to just over 2.8 gallons per person, a figure that’s set to rise as Millennials replace Boomers as the major purchasers of alcohol.
In fact, alcohol consumption trends have changed considerably since 2001, when the first Millennials came of age: Consumption of spirits increased 13% and wine consumption was up 9% while beer consumption dropped 4.3%. Oenophiles are definitely making their presence known when it comes to alcohol purchases.
A word of caution is in order, however. Investing in Wine Stocks is a lot more complex than choosing a good bottle of wine. Although alcoholic beverages could technically fall into the category of sin stocks, wine is an asset class that more closely resembles art when it comes to investing. There are definitely opportunities for a careful investor, but timing and the selection of individual equities is crucial, especially when it comes to collectible or fine wine investments.
That being said, however, if you’d like to diversify with some exposure to your favorite beverage, here’s a look at some top performing wine stocks that could outperform in 2018.
Constellation Brands Inc. (STZ)
Constellation Brands is not just a wine stock; the company is a major producer and marketer of spirits, beer and wine with such household brands as Robert Mondavi, Ravenswood, Nobilo, Ruffini, Clos du Bois, Wild Horse and Arbor Mist under its belt. It also sells craft and import beers (Corona, Modelo, Ballast Point) and spirits (Black Velvet whiskey and Svedka vodka). But this mass market appeal and diversification actually works in its favor.
The company has a market cap of $41.6 billion and annual net sales exceeding $7 billion. It is a favorite of institutional investors, as well, with nearly a third of its stock held by institutional shareholders.
Constellation has consistently outperformed analysts’ expectations in both earnings and revenue with an average earnings growth rate of 25.23% and an annual revenue growth rate of nearly 28%. The consensus rating from analysts is “overweight” with a 12-month median price target of $247.62. The annual dividend yield is .98% as of February 14, 2018.
Truett-Hurst Inc. (THST)
If you’ve got a high risk tolerance and get excited about equities that trade in the penny-stock range, Truett-Hurst might be the company for you. The company, based in Healdsburg, CA, produces mid-range wines under the T-H imprimatur as well as niche brands like Bradford Mountain, Criminal and Fugitive. It currently trades in the $1 to $3 a share range.
Truett-Hurst is a nano-cap with market cap of around $14 million and total revenue of $21.5 million. (See also: Penny Stocks to Watch in 2018.)
Vina Concha y Toro SA (VCO)
This Latin American company owns vineyards in Chile, Argentina and the US. Fans of Latin American wines will recognize the VCO brands which include Don Melchor, Almaviva and Casillero del Diablo, as well as the Fetzer name from its North American subsidiaries. The company produces everything from value-priced wines to high-end Bordeaux rarities.
This is a small-cap firm with a market cap of around $1.5 billion. The stock rose 13% in 2017 and is currently trading at about $43 per share as of February 15, 2018.
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