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Why This TSX Stock Popped 13% on Friday — and Why I’m Buying!

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Shelves holding drinks bottles
Shelves holding drinks bottles

Written by Ambrose O'Callaghan at The Motley Fool Canada

The S&P/TSX Composite Index was down 436 points in late-morning trading on January 24. Investors must be very selective to score with stocks in this volatile environment. Today, I want to look at one TSX stock that surged to close out the end of the previous week. Let’s jump in.

Why this TSX stock spiked last week

Big Rock Brewery (TSX:BR) is a Calgary-based company that produces, markets, and distributes craft beers, ciders, and ready-to-drink beverages. Shares of this TSX stock climbed 13% on Friday, January 21. Meanwhile, its shares were up 2.6% in a brutal day on the markets today.

On January 14, Big Rock Brewery announced that its chief financial officer (CFO) was set to resign effective February 11. On the brighter side, the company would dip into more appealing news in the next week. On January 18, it unveiled a new collaboration with Balzac’s Coffee. It set out to brew a breakfast stout using specialty roasted coffee beans.

Investors can expect to see Big Rock’s final batch of fiscal 2021 earnings on in March. In Q3 2021, sales volume fell 6% to 47,367 hectolitres. However, net revenue rose to $13 million compared to $12.8 million in the previous year. Meanwhile, adjusted EBITDA decreased 52% year over year to $1.3 million. Moreover, net income dropped 77% to $0.2 million, or $0.03 per share.

Shares of this TSX stock are still trading in very favourable territory compared to its industry peers. Moreover, it is geared up for solid revenue growth going forward.

The alcohol industry is worth targeting if you are worried about volatility

Canadian investors may want to target equities in the alcohol industry, as market volatility has picked up. An economic pullback may not be far behind, as countries continue to struggle with the COVID-19 pandemic, labour shortages, and a supply chain crisis. Alcohol sales have increased significantly in Ontario during the COVID-19 pandemic. Meanwhile, consumption has increased among about a quarter of the population, according to a recent survey by Statistics Canada.

Investors should consider exposure to the alcohol industry, as economic uncertainty has reared its head in early 2022. Big Rock Brewery is one option. However, investors should also seek out companies that produce wine and spirits.

Here’s another TSX stock I’d consider today

Corby Spirit and Wine (TSX:CSW.A) is a Toronto-based company that manufactures, markets, and imports spirits and wines. I’d suggested that investors snatch up this TSX stock back in March 2021. Shares of Corby have been flat to kick off 2022.

The company unveiled its first-quarter fiscal 2022 earnings on November 10. Investors can expect its next batch of results in early February. Net earnings were up from pre-pandemic levels in the first quarter of fiscal 2020. Shares of Corby Spirit and Wine possess a favourable price-to-earnings ratio of 17. Meanwhile, it recently hiked its quarterly dividend of $0.24 per share. That represents a strong 5.7% yield.

The post Why This TSX Stock Popped 13% on Friday — and Why I’m Buying! appeared first on The Motley Fool Canada.

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Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns and recommends CORBY SPIRIT AND WINE LTD CLASS A.


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