Across the world, analysts unanimously agree 2022 is the year of luxury. This elevates a range of select industries, placing the focus of affluent consumers on high-end purchases while pushing certain investments like fine wine stocks above others. According to the trusted Bordeaux Index, trading volumes for fine luxury wine are up 40% over 2021. Not only are people spending far more on fine wine, but more and more mid to long term investors are diversifying their portfolios with wine investments. Given the present positioning of the industry, now is a good time to consider leading fine wine stocks, and we’ve got a mid-term forecast for six of the most promising companies out there.
Constellation Brands Inc. (NYSE: STZ)
It should arrive as no surprise that America’s number one beer importer is a hot stock to watch. Over the last six months, STZ stock has come down considerably, dropping from a high of 254.60 on January 4th, 2022, to just 214.72 as of the second week of March. The dip marks a potentially lucrative entry point for many traders who are expecting estimates to pan out. With Wall Street analysts expecting a median price target of $272.52 with a high of $310 and a low of $213.64, there’s certainly ample room for growth before the end of the year. Morgan Stanley, Wells Fargo and Barclays all maintain that Constellation Brands Inc. is overweight and trading below fair value with a Forward Price to Earnings ratio of 18.48, which is just below the industry average of 20.37.
Diageo PLC (LON: DGE)
The largest producer of Scotch whisky in the world, Diageo PLC, is another beverage investment to consider. As the company behind Johnny Walker, Guinness and Casamigos tequila, Diageo is a favoured growth stock with a solid earnings outlook and well-positioned value. After all, at a price of $195.38 as of midway through Marchwith a PE ratio of 25.71 as compared to the closest competition, the Brown-Forman Corporation at 37.83, DGE’s fair share price becomes apparent. As of March 11th, DGE was down by just over 10%, which means that Diageo PLC shares are trading at roughly the same price point as they were back in May of 2021. Traders should keep in mind that stock is roughly 21% away from the average price target of $225.94 for 2022, and growth is sitting at -19.03% for the year. When things do turn around, there’s a lot of room for the share price to spike and stay high.
Brown Forman Corporation (NYSE: BF.B)
As noted earlier, Brown-Forman may not be the cheapest luxury beverage stock around, but the creator of Jack Daniel’s has astounded investors with 32,000% growth over its lifetime and no less than 37 years of dividend growth in a row. Furthermore, 2022 may be one of the better years for Brown-Forman stock after exceeding earnings estimates. Brown-Forman’s third quarter ended at the end of January 2022 and left the company reporting a net sales increase of 11% for the year, with 13% expected by the time fiscal 2022 ends. It is not a stock that’s going to fruit the greatest single-year growth, but with a dividend payout ratio of 43% of cash flow and free cash flow rising by 14.49% to $621 million in 2022, the quarterly dividend and special dividend payouts of above a dollar can quickly add up, especially when investing for more than a single year.
Willamette Valley Vineyards (NASDAQ: WVVI)
Any share that plummets 47% is going to draw attention from investors, and this is exactly what happened to WVVI over just three months. Willamette Valley Vineyards is trading with a 52-week high of $17.43 attained in November of 2021 and a low of just $7.90. Despite the huge difference in share price even when compared to pre-COVID levels of around $15, the company’s PE ratio of 36.68x shows just how overvalued this stock is. After the recent knock to share price, several large existing institutional investors, such as Renaissance Technologies LLC and Advisor Group Holdings Inc, have lifted their stake in Willamette Valley Vineyards shares. However, as a stock that doesn’t pay dividends that’s trading with a 200-day moving average price of only $11.78, we’d advise new investors to wait for an even lower entry point when considering Willamette stock.
The Duckhorn Portfolio (NYSE: NAPA)
Duckhorn Portfolio Inc shares are at one of their lowest points since first turning in May of 2021, and if the company’s second-quarter 2022 financial results are anything to go by, the year is going great. The company is consistently outperforming the high-growth luxury wine industry and boasts a sales increase of 18% versus the same period of 2021, with 18.5% higher gross profit and a 23.6% year-on-year net income increase. If Duckhorn meets its goals, it’ll be $34.3 million EBITDA, a 6.6% higher target than before. The closing price on March 10th of $18.10 was down 22.42% year-to-date and a whopping 28% from the 52-week high of $25.25, which is coincidentally close to where analysts estimate this year’s price objective. At a median of 24.67 with a low 18.1 and a high of 28, around 30% gains are likely. We suggest watching The Duckhorn Portfolio and its movements closely throughout the year because with the new Chief Marketing and DTC Officer having been named on March 10th, this premier wine company may surprise investors with even greater growth.
Pernod Ricard (EPA: RI)
Pernod Ricard, the second-largest wine and spirits seller in the world responsible for Jacob’s Creek, released its half-year report for fiscal 2022 and is marginally ahead of estimates. Revenue is 2.7% ahead of forecasts while statutory earnings per share were 29% ahead at €5.33. The news didn’t affect analyst price targets seated at a median of €223.90 with a low of €164 and a high of €280. Organic sales are up 13% as compared to pre-COVID levels, and organic growth is up a whopping 20% versus pre-COVID. The company has been steadily picking up momentum in the second half of the year, with a high likelihood of exceeding annual estimates. A key sign for potential investors to up their stake or capitalise on the current low and gain exposure is the acceleration of the Pernod Ricard share buy-back program, reclaiming €750 million worth of shares in FY22.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only