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9 Best Wine Stocks to Invest in 2022

Aria Thomas

Aug 25, 2022 15:36

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Although investing in wine stocks may be hazardous, it is a form of investment that has made many individuals wealthy in recent years. It is prudent to invest in wine stocks because it is one of the safest investments worldwide. If you know how to stock wine, you can generate a substantial profit from such a stock. People's interest in this profit source has shifted due to its advantages.


You may be aware that wine is one of the most popular luxuriant beverages in the world. Do you realize that aged wine tastes better than young wine? This is also another reason to invest in wine stocks, as people enjoy drinking such beverages.

Is Wine A Good Investment?

As with any other alternative investment, purchasing wine can give excellent portfolio diversity. Stocks, such as fine wine, provide investment returns that have little to no link with traditional assets, and may even be negatively connected with the stock market.


You've likely heard numerous times from experts about the necessity of diversification. Wine provides a unique source of diversification due to the fact that its value is determined by factors unrelated to economic performance, interest rates, business earnings, or conventional investor sentiment.


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Weather patterns, harvest yields, vintage, and consumer trends all interact with supply and demand to influence the value of wine. Due to the fact that these elements are unrelated to the stock market as a whole, wine investments might complement a conventional portfolio.

Is Investing in Wine Stock A Safe Option?

Every investment that generates a decent return is secure. As wine stock offers numerous advantages, it is considered a secure investment. The following evidence demonstrates that such an exchange is not a bad idea.

High Returns

A competent financial advisor will advise you on how to invest in wine. Numerous wine stocks vary significantly on the market. According to a poll, the Liv-Ex index, which consists primarily of Burgundy wine in France, has increased by 89.6% in the past five years. It indicates that the stock gains 10% every year, and this stock will generate a big profit. Therefore, this is the primary factor that makes wine stock a safe investment.

The Basic Economics of Wine Stock

Another factor that makes investing in wine stocks secure is their straightforward economics. The value of a stock depends on the vintage or market demand for that particular stock. The wine stocks always feature a high-quality vintage, which increases their worth. The straightforward economics of the wine stock gives it market significance.

Available to All

Using electronic means, a quality wine stock can be made available to everyone. Once there were restrictions on the sale of wine stocks, but now anyone can purchase them. Everyone is permitted to make a purchase. This factor has increased the value of the wine stocks, and this item can outperform all other stocks in the competition with these stocks.

Passive Source of Income

A benefit of investing in wine stocks is that it is a passive way to generate income. Once you have invested, your daily revenue will increase. Money acquired might also be put to work for you. For example, a $100 investment in such stocks in 1952 would be worth around $420,000 in 2020. It demonstrates the value of this passive income stream to you.

Physical Possession

Wine stocks are not merely like shares in the stock market. You own an item with such stock. When investing in wine stocks, you will become the owner of some tangible stock. You will become the owner of these things, for which others have fought their entire lives, simply by investing in them. This demonstrates the security of this investment for you.

Considerations Regarding Wine Stocks

Diversification of brands is essential for success in the consumer staples industry due to the availability and popularity of name brands. For wine and alcohol producers, brand recognition is vital. For instance, Americans do not simply desire whiskey; they choose Jack Daniels or Johnny Walker. Strong brands drive sales for companies whose products have inelastic demand, such as consumer staples.


Gross margins: For non-growth-oriented stocks such as consumer staples, total revenue does not provide a good picture of gross margins. Gross margins, which may be computed by deducting production costs from net sales revenue, should be used to evaluate companies that sell staples. Companies with high gross margins have greater capital efficiency because they retain a greater proportion of their gross profits.


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Returning cash to shareholders: Alcohol producers are not innovators, and many do not seek the explosive expansion of the technology industry. Instead, these corporations are accustomed to repaying cash to shareholders through dividends and buybacks. One example is the Invesco BuyBack Achievers ETF (NYSE: PKW). When investing in wine stocks, you should seek out companies with a track record of increasing dividends or repurchasing shares.

Best Wine Stocks to Invest in

Brown-Forman Corporation (BF-B) 

Brown-Forman Corporation, founded in 1870 and headquartered in Kentucky, sells alcoholic beverages. The company's stock has returned over 18% to investors in recent years.


Some of its most well-known brands include Jack Daniel's, Canadian Mist, Woodford Reserve, and GlenDronach.


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Brown-Forman, one of the world's largest publicly traded wine firms, also manufactures Sonoma-Cutrer wine. If you are interested in observing titans in the wine and spirits market, you may want to keep an eye on this company. Their consistent growth over the previous five years has certainly caught our notice.

Eastside Distilling, Inc. (NASDAQ: EAST)

Eastside Distilling, Inc. (NASDAQ: EAST) is an Oregon-based beverage company that sells both coffee and alcoholic beverages. It was established in 2004 and ranked ninth on our list of the ten finest wine stocks to invest in for 2021. The corporation owns numerous well-known brand names, including Hue-Hue Coffee Rum, Azuia Tequila, Portland Potato Vodka, and Burnside Whiskey. The company's stock has returned investors more than 141% over the past year.


Eastside Distilling, Inc. (NASDAQ: EAST) reported over $3.24 million in revenue for the first quarter of 2021, a decrease of more than 4% compared to the same period in the prior year.


Renaissance Technologies, a New York-based investment firm, is the largest shareholder in Eastside Distilling, Inc. (NASDAQ: EAST) among the hedge funds, followed by Insider Monkey, with 261,170 shares worth more than $483,000.


Eastside Distilling, Inc. (NASDAQ: EAST), like Brown-Forman Corporation (NYSE: BF-B), Diageo plc (NYSE: DEO), and Constellation Brands, Inc. (NYSE: STZ), is one of the finest wine stocks to invest in 2021.

LVMH Moët Hennessy Louis Vuitton

The vast luxury goods portfolio of LVMH Mot Hennessy Louis Vuitton has generated one of the world's wealthiest individuals: CEO Bernard Arnault. Champagne and other ultra-premium beverages are heavily featured in this assortment of high fashion. Champagne house Mot & Chandon is a beverage of the affluent and famous and a highly sought-after brand for special events, as indicated by the company's name. Other luxury champagne brands include Dom Pérignon, Krug, and Veuve Clicquot.


In 2020, the champagne and distilled goods business of LVMH reported a 15% reduction in sales due to the COVID-19 pandemic. As the global economy regains its footing, however, the boiling of champagne has resumed. Champagne accounts for less than 20% of LVMH's overall revenue. Nevertheless, the luxury conglomerate as a whole is a long-term growth stock, and its range of premium goods is in constant demand. In rising economies such as China, the demand for ultra-luxury products is expanding rapidly. In addition, shares yield a little dividend. Look no further than LVMH Mot Hennessy Louis Vuitton if you're an investor seeking consistent growth from the king of luxury grape-based alcoholic drinks.

Corby Spirit and Wine Limited (TSE: CSW.B)

Corby Spirit and Wine Limited (TSX: CSW.B) was founded in 1924 as a manufacturer and distributor of alcoholic beverages in Canada. Tenth on our list of the ten greatest wine stocks to invest in for 2021. The stock has returned investors more than 26% over the past year. J.P. Wiser's Canadian Whisky, Worts Canadian whiskies, Lamb's rum, Polar Ice vodka, McGuinness liqueurs, Mumm Champagne, and Jacob's Creek, Stoneleigh, Campo Viejo, and Wyndham Estate wines, among others, are owned by the company.


On May 13, Corby Spirit and Wine Limited (TSX: CSW.B) released financial results for its third fiscal quarter, showing a net revenue of over $6 million, an increase of over 20% compared to the same period the previous year.


Corby Spirit and Wine Limited (TSX: CSW.B) is an excellent choice for income investors due to the company's consistent and generous dividend payments. The corporation announced a dividend of $0.21 per share on May 13, in accordance with its policy of paying out 90% of the prior year's earnings.

Duckhorn Portfolio (NYSE: NAPA)

Duckhorn Portfolio (NYSE: NAPA) is the third-best wine stock with a Zen Score of 40, which is 9 points higher than the average score of 31 for the wine industry. It passed thirteen out of thirty-three due diligence tests and has acceptable fundamentals. Over the past year, Duckhorn Portfolio's stock has declined -by 7.98%, lagging other wine stocks by -13 percentage points.


The average 1-year price objective for Duckhorn Portfolio is $24.50, representing an upside of 29.56 percent from the stock's current price of $18.91.


Wall Street analysts have a consensus Buy recommendation for Duckhorn Portfolio stock. 25% of the four analysts covering Duckhorn Portfolio have a Strong Buy rating, 50% have a Buy rating, 25% have a hold rating, 0% have a Sell rating, and 0% have a Strong Sell recommendation.

Willamette Valley Vineyards (WVVI)

Willamette Valley Vineyards Inc. is headquartered in Oregon and produces wine for international distribution, with a primary concentration in the United States. Willamette Valley Vineyards is one of the major Pinot Noir growers in the United States, with over 30 years of expertise in the wine industry.


This is a brand you should absolutely keep an eye on during 2022. Oregon will continue to produce high-quality wines, regardless of how the wine industry may evolve over the next few years.

Treasury Wine Estates

This next recommendation crosses the equator and the Pacific Ocean to reach Australia, one of the world's leading wine producers. Treasury Wine Estates is one of the largest companies in Australia (Accolade Wines is another top company in Australia; however, it is now controlled by private equity firm Carlyle Group) (NASDAQ: C.G.). Treasury Wine Estates owns Penfolds, 19 Crimes, Stag's Leap, and Beaulieu Vineyard, among others.


Treasury Wine Estates is a rare wine-focused stock, but its shares have struggled to gain traction in recent years, particularly after the epidemic, as sales and profitability have yet to recover. However, being one of the industry's largest participants, it provides a respectable dividend and may be worth a look if you're seeking investment income.

Constellation Brands

Constellation Brands is most recognized for its line of Mexican beers, which includes Corona, Modelo, and Pacifico. It also owns various wine brands (Kim Crawford, Robert Mondavi, etc.) and a 40% interest in the cannabis company Canopy Growth (NASDAQ: CGC), making this stock a more diversified play on the beverage market.


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Prior to 2021, Constellation was a rapidly expanding company due to its beer industry, which accounts for around three-quarters of total sales. The company's portfolio of alcoholic beverages has developed, however, and the company's future growth is projected to be more steady and gradual. It is anticipated that the one-fourth of revenue generated by wine and spirits will be a solid business. Constellation's portfolio has grown over the years as it has shown to be a successful investment in a variety of alcohol-related industries. In the previous few years, the company's wine cellar and other alcoholic beverages have generated operational profit margins of well over 30%. It also pays a tiny dividend, making it comparable to LVMH in terms of growth and income.

Andrew Peller (ADW-B)

Andrew Peller Limited is involved in manufacturing, bottling, and distributing wines and craft alcoholic beverages in Canada. The company's brands include Peller Estates, Trius, Thirty Bench, Wayne Gretzky, Sandhill, Red Rooster, Black Hills Estate Winery, Tinhorn Creek Vineyards, Gray Monk Estate Winery, Raven Conspiracy, and Conviction; Peller Family Vineyards, Copper Moon, Black Cellar, and XOXO; and Hochtaler, Domaine D'Or, Schloss Laderheim, Royal, and Sommet. It also manufactures craft alcohol beverages, such as No Boats on Sunday ciders and seltzers, beer, spirits, and cream whisky under the Wayne Gretzky No.


The opening stock of Andrew Peller shares was C$12.62, up from the previous day's closing of C$12.50. The most recent cost was $12.62 (25-minute delay). Andrew Peller is publicly traded, has around CAD$379.2 million in trailing 12-month revenue, and employs 1,622 people. All indicated costs are in Canadian dollars.

The Three Disadvantages of Investing in Wine Stocks

While wine stocks have the potential to be profitable investments, there are three important risks to consider.

1. High Volatility

Financial markets are turbulent due to a variety of variables, including:


  • Trades imbalances

  • Modifications to monetary policies

  • Economic crises

  • The financial well-being of a business


When the stock market is tumultuous, the stock of wine stocks may increase and fall several times in a single day! Due to these uncontrollable market changes, deciding when to purchase and sell wine stocks can be difficult.

2. Brokerage Costs

It can be extremely dangerous if you do not know when and how to invest in stocks. The only solution is to employ stockbrokers to help you manage your finances.


However, each time you purchase or sell a stock, you will be required to pay a large brokerage commission. Some brokerage businesses demand additional fees for currency conversion and account maintenance. In the long run, hefty trading fees can diminish your wine stock profits.

3. Time-Consuming Investment

Investors in wine stocks must conduct in-depth research and analysis of a variety of public firms in order to determine which ones to invest in.


To know when to sell a wine stock after purchasing it, you must regularly check its share price on the stock market. Even if you can afford the services of a stockbroker, this makes it a pretty time-consuming and complex investment.

Conclusion

While it is possible to earn a profit by investing in wine stocks, you should be aware that, like any other investment, wine stocks are not risk-free. These stocks are vulnerable to changeable conditions, both in the market and the wine business; therefore, before investing, you should thoroughly evaluate your choices. And if you're new to investing or if it's been a while since you analyzed your investment accounts, compare brokers to ensure that your trading account has the greatest features.