Molson Coors (TAP) owns some of the world’s top brands of beer. Its shares commanded over $100 during both 2016 and 2017.
Since then, though, the stock tailed off to a recent low of $32.11. After a minor rebound TAP was still offered on Monday for the bargain price of $35.21.
Momentum traders can stop reading right here. Value investors should be taking notes. At its current quote, the stock sold for just 12.8-times its 2020 estimate and 10.1-times Value Line’s earnings per share projection for its 2021 results.
Those compare quite favorably with TAP’s post-2011 typical price-to-earnings of 18.2-times. Better still, EPS are now expected to grow nicely, well into the future. Value Line sees EPS rising to $4.65 not later than 2025.
Even a partial reversion-to-the-mean valuation suggests TAP could rebound to about $56 by Dec. 31, 2021. Hitting that relatively modest goal would deliver an almost 74% gain from $32.21.
Yahoo Finance takes an ultra-conservative view on TAP in assuming the shares will only fetch 11.3-times its own 2021 earnings estimate for TAP. Even that well below typical valuation would result in about a very acceptable 25% 12-month gain.
Independent research house Morningstar is more in line with my own opinion. It now assigns TAP its highest, 5-star, Buy rating. Morningstar deigns to provide year-ahead goal prices, but does let us know what it feels is present-day fair value for each stock it covers.
For Molson Coors that figure sits at $55. Almost 56% above where it’s offered right now.
Even that target could prove way too conservative. TAP peaked from $61.94 – $112.20 each year from 2014 right through 2020 year-to-date. There’s good reason to believe it will reach those levels again before too long.
Value Line calls for TAP to be $45 by April of