Forget Pepsi and Coke: The 3 Best Beverage Stocks to Buy Instead

Stocks to buy

Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP) are the first names that most investors think of when it comes to non-alcoholic beverage stocks.

The competition between Coke and Pepsi is intense and cutthroat. Pepsi recently announced that it had wrestled the Subway account away from Coca-Cola.

“For nearly twenty years, The Coca-Cola Company has proudly served Subway restaurants in the U.S,” Coca-Cola told Fortune in a statement. “We are committed to serving Subway through the end of this year and will remain focused on delivering value for Subway, their Franchisee Partners, and consumers.”

In addition to getting the beverage account from Subway, it already supplies it with Frit0-Lay chips. 

You can invest in KO and PEP stock. However, that comes with the usual shots across each other’s bow in pursuit of market share. 

Or, you can invest in a beverage stock and gain new ground in an intensely competitive industry. 

Here are three of my favorites other than Coke and Pepsi. 

Celsius Holdings (CELH)

Source: The Image Party / Shutterstock

Celsius Holdings (NASDAQ:CELH) is the largest of the three, with a market capitalization of over $18 billion. It’s also a backdoor way to gain exposure to Pepsi, which owns 8.5% of the energy drink maker. It invested in Celsius as part of its August 2022 U.S. distribution deal. 

At the end of March, Celsius announced expanding its distribution into Australia and New Zealand. On April 4, it announced it was expanding into France through Suntory Beverage & Food France. This follows on its January announcement of its distribution agreement with Suntory for the United Kingdom and Ireland.  

CELH has lost ground in recent weeks due to a change to its Pepsi distribution deal that gives the drinks giant more financial incentives to focus on Celsius products that could affect future margins as a result. However, it’s also possible that the increased focus will add revenue growth, more than offsetting any margin reduction. 

I first recommended CELH stock in October 2021. It’s up 166% in the 30 months since.      

BellRing Brands (BRBR)

Source: rblfmr / Shutterstock.com

BellRing Brands (NYSE:BRBR) is the second-largest of the three, with a market cap of over $7 billion. I recommended its shares in September 2021 as part of a “Brands” portfolio. 

BellRing’s major brands include Premier Protein drinks and Dymatize. It was first spun off in October 2019 by Post Holdings (NYSE:POST), with the former parent company selling $500 million in BellRing stock. On March 10, 2022, it distributed the remaining 80.1% of BellRing stock it owned to its shareholders. Post shareholders received 1.267788 BellRing shares for each held in the parent. 

BellRing’s Q1 2024 results in February included an 18.7% increase in sales and a 27.6% increase in net earnings. During this quarter, Premier Protein and Dymatize had an 18.9% and 20.9% revenue increase, respectively. It got out of the North American PowerBar business over the past year.     

In 2024, it expects revenues of at least $1.87 billion, up from its previous guidance of $1.83 billion, with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $375 million, $15 million higher than its previous guidance. 

13 of 17 analysts rate its stock a buy. 

Fevertree Drinks (FQVTF)

Source: IZWAN IS / Shutterstock.com

Fevertree Drinks (OTCMKTS:FQVTF) is the smallest of the three, with a market cap of $1.6 billion. 

I’ve always liked the business because it makes premium carbonated cocktail mixes such as ginger beer and tonic water. However, its stock has not done well in the past five years, down 65% compared to a 75% gain for the S&P 500

It is the value play of the three. 

In January, it cut its 2024 revenue outlook from 10% sales growth to 8%. In fiscal 2023, the company forecast annual sales as high as 390 million British pounds ($485.63 million), but ultimately came in at 364 million British pounds ($463 million). 

Inflation is partially to blame for its retreating shares. Consumers are opting for cheaper cocktail mixes or abstaining altogether to save money. 

On the bright side, it expects its gross margin to improve by 600 basis points in 2024 to 38.1%, 360 basis points higher than fiscal 2022.    

It has a price-to-sales ratio of 3.55, considerably less than its five-year average of 6.10. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

Articles You May Like

Hot Stocks 2024: The 3 Best Places to Put Your Money This May
3 Homebuilder Stocks to Buy on Tight Supply and High Demand
3 Meme Stocks to Sell That Even Roaring Kitty Can’t Save
3 Sizzling Restaurant Stocks to Buy as Margins Expand
3 Beaten-Down Stocks Ready to Bounce Back Hard