Cannabidiol-infused (CBD) beverage market holds tremendous potential, owing to increasing health-consciousness among consumers, who are realizing the health benefits of CBD-infused drinks. Let us, thus, take a look at a couple of stocks that are positioned to gain from this new consumer trend.
CBD Beverages Market to Boom
According to a report by Zenith Global, the CBD-infused drinks market could be worth $1.4 billion by 2023, assuming a CAGR of 74.7%. There are ample reasons behind the popularity of CBD-infused drinks. First, consumer preference is shifting toward non-alcoholic beverages. Lower alcohol sales worldwide prove that. These could go further south as consumers step up on their demand for cannabidiol-infused beverages.
Second, CBD helps combat a string of health conditions such as arthritis, migraines, epilepsy, schizophrenia, insomnia, seizures, inflammation, the side effects of cancer and multiple sclerosis. The chemical has become more popular for relieving pain, offering relaxation and lifting one’s mood.
Third, product innovation is pushing sales. Sustainable and attractive packaging, ready-to-drink solutions, making ingredients public and a transparent consumer-producer relationship is building trust around products. When it comes to CBD beverages, these factors are rather crucial to making consumers return for more.
Finally, growing brand endorsements and knowledge of CBD-infused beverages are making these products hard to miss. In addition, speaking of a few CBD-infused products that are a hit among consumers, CBD-infused beer tops the list. Many notable brewers are now opting to manufacture the product.
Recently, California-based brewer Two Roots Brewing Co. said it is set to acquire Rochester Mills Production Brewery, the latter a Michigan-based craft beer producer. Two Roots plans to infuse, package and market cannabis-infused beer under its label.
4 Stocks in Focus
We have chosen four beer and marijuana stocks that could gain big from the CBD-infused drinks rage. All of these stocks carry a Zacks Rank #2 (Buy) or 3 (Hold).
Anheuser-Busch InBev SA/NV BUD announced a partnership with Tilray, Inc. TLRY in December 2018 to produce marijuana-based beverages. The deal is worth $100 million.
Anheuser-Busch carries a Zacks Rank #2. In fact, the company’s stock has outperformed the Zacks Beverages – Alcohol industry on a year-to-date basis (+48.1% vs +28.1%). The Zacks Consensus Estimate for its current-year earnings has risen 8.8% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Per a CNBC report,The Boston Beer Company SAM is seeking an entry into the cannabis market after its Truly Hard Seltzer turned the company’s stock price around.
Boston Beer Company carries a Zacks Rank #3. In fact, the company’s stock has outperformed the Zacks Beverages – Alcohol industry on a year-to-date basis (+63% vs +28.1%). The Zacks Consensus Estimate for its current-year earnings has risen 3.8% over the past 60 days.
Constellation Brands, Inc. STZ is heavily invested in the cannabis market. The Corona beer producer first invested in Canopy Growth (CGC) in 2017 and has followed with more investments since then.
Constellation Brands carries a Zacks Rank #3. In fact, the company’s stock has outperformed the Zacks Beverages – Alcohol industry in the last six months (+19.6% vs +13.5%).
Aphria Inc. APHA is a major global cannabis company. The company holds a Tier 3 license to grow more than 5-acres cannabis for medical, scientific and therapeutic purposes.
Aphria carries a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has risen more than 100% over the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
Anheuser-Busch InBev SA/NV (BUD) : Free Stock Analysis Report
Constellation Brands Inc (STZ) : Free Stock Analysis Report
Tilray, Inc. (TLRY) : Free Stock Analysis Report
Aphria Inc. (APHA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research