USA: Anheuser-Busch still rules the beer world, according to Barron's
Despite last week's dismal third-quarter results and sharply lowered full-year forecast, Anheuser-Busch Co Inc still rules beer land and its stock and will regain its lofty levels, Investors.com cited Barron's Online commenting on October 30.
The St. Louis-based behemoth controls 50% of the U.S. beer market, is twice the size of its nearest competitor, has far more pricing power and commands the "most potent" distribution and marketing system in the U.S., the weekly magazine said.
And pay no attention to the category-killer-in-a-declining-industry story. Beer drinking is cyclical and Anheuser-Busch is much better positioned than rivals such as SABMiller and Molson Coors Brewing Co (TAP) to weather the down cycle well.
What's more, Warren Buffett, "arguably the world's best investor," likes the beer and the stock, enough so to buy a "significant" amount of shares in April, Barron's noted.
And for Buffett followers, the shares are much cheaper now, trading at 16 times analysts' 2006 earnings estimates of $2.56 a share, about in line with the overall market, but well below their historic price-to-earnings ratio of 22, Barron's said.
On Friday Anheuser-Busch (BUD) shares ended the session at $40.57, off 3 cents.
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