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This is a review of a low price consumer noncyclical super sector stock in the Consumers Goods Sector and Beverage Industry. Transcript Below: Hi how are you, Its 0:03 Mathis Conner here with Conner Management Group 0:07 0:08 and this week we are here to look at another stock for you to consider buying 0:13 this week we are looking at the best consumer non cyclical 0:16 stock buy right now. And today is Thursday January 10 0:21 2014 and the stock 0:25 the industry it in is beverages 0:28 dash Brewers. The 12 month 0:32 upside potential we see at 35. percent 0:36 so that is some nice appreciation potential potential 0:39 and we will get into discussing the name of this company 0:42 The name of the company is not unfamiliar 0:46 to most people. Its Molson Coors 0:49 Brewing. The famous Coors 0:53 commercials are pretty hard to miss during weekend sports that's 0:57 for sure 0:57 The ticker symbol is TAP, the industry they are in is beverages dash brewers 1:04 and once again we see the 12 month upside at a 1:08 very healthy 35 point 8 percent 1:11 Some quick facts 1:15 the business summary of Molson is Molson Coors Brewing Company 1:20 manufactures and sells beer in other beverage products 1:23 the company sells products in Canada under the Coors Light, 1:27 Molson Canadian, Molson Export, Molson Canadian 67 and 1:32 a list of other brand names but you know 1:36 at the end of the day they sell beer 1:39 and sell it worldwide. The website 1:43 can be found WWW dot 1:46 Molson Coors dot-com that M O L 1:49 S O N C O O R S 1:53 dot com. The company is headquartered in Denver Colorado. 1:57 They were founded 1873. The number 2:00 of employees they have stand at 18,700. Once again their ticker symbol is TAP - 2:07 "tap". The sector there are in is consumer goods. 2:12 2:16 The annual revenue for Molson 2:19 over the last 12 months stood at 4.2 billion dollars, 2:23 their net income on at 494 2:28 million dollars and their cash from operations 2:31 over the last 12 months was 1.2 billion dollars. 2:35 So this companyh generates quite a bit of cashflow. 2:39 The capitalization of Molson stands at 10.2 billion dollars. 2:45 On the next slide 2:49 are pictures from the website. 2:53 We've got the logo Molson Coors 2:57 and you know a picture of 3:00 a frosty Coor Light beer 3:04 at a football stadium with that backdrop 3:07 of snowy mountains which is pretty a 3:10 common theme for their commercials here in North America. 3:15 On the left there is a list of about 6 3:18 other beers they have 3:22 in other countries. There is the famous Amstel Light 3:26 but they have number of other beers that 3:29 I'm not familiar with Aguila, Strika ... 3:34 3:38 So these are all just other varieties of beer or varitties 3:42 of the American brand name. On to the next slide. Taking a look 3:47 at some of the financial metrics of Molson Coors: 3:51 the annual revenue stands at 4.2 billion dollars over the last 12 last months, 3:55 the net income, 494 million, and once again the cash from operations 4:00 over the last 12 months has been 1.2 billion dollars. 4:04 The operating margins in 4:07 2012, Molson Coors was 18 point 1 percent 4:11 and it 2013 4:14 the past year, the operating margins have been tracking at 21 percent. 4:18 So we are definitely seeing some some improvement which is 4:22 definitely a good thinkg, The trailing p/e right now stands at 20-point 5, and the 4:27 forward p/e ration stands at 13 point 4. 4:31 So that implies some healthy 4:34 expansion of earnings as expected by 4:38 most analysts - which is the suggestion with type of range between trailing and forward 4:41 PE ratios. The PEG ratio stands at 3.6, 4:46 its not that cheap, 4:49 but lets go on, the price to sales ratio stands at 2.4 4:54 and the price to book is at 1.2, that's pretty low 4:58 The enterprise-value to ebitda ratio is at 16-point 7. 5:02 So this is an interesting group of 5:05 valuation metrics. On one hand you you've got the 5:10 the PE ratios implying that quite of bit of earnings expansion is expected, 5:15 the PEG ratio may be slightly high, getting 5:19 slightly rich, then the price to book ratio is pretty low 5:23 at 1.2, and the enterprise value to 5:27 to ebitda value seems a bit rich 5:31 at 16.7 and 5:34 we might see see some conflict here 5:37 regarding what's cheap or not, but 5:40 this probably just a representation of the fact that this company generates 5:45 so much cash from operations. I mean cash from operations of 5:50 around 25 percent you know 1.2 5:53 billion dollars against annual revenue of 4.2 billion .. 5:57 you just don't see that proportion 6:01 all that often. I'm sure that kind of explains these 6:05 valuation metrics in an indirect way. 6:08 On to recent pricing. 6:12 Yesterday's close of Molson Coors was fifty-five dollars 6:15 26 cents. The 52-week low ... 6:19 6:24 I don't have that right. The 52 week low number 6:29 and high number are off. 6:32 I'll come back to those on the next slide. slide 6:36 But the 20-day moving average I have at 54 dollars and 6:40 85 cents. The 50-day moving average of 6:43 $54.28 and a 200-day moving average of 6:48 $51.51 6:50 6:53 So this is a reasonably tight 6:56 differences among moving averages. The average volume 7:00 of Molson Coors stands at 871 7:05 thousand shares per day. The Beta is at 1.0. 7:09 A Beta of 1 says that the stock tends to 7:13 move with the broad general stock market. 7:17 The dividend yield is 7:20 2.3 percent - so 7:23 a healthy and decent dividend yield. The average dividend payout ratio stands at 34 percent. 7:28 That's the average over the last 5 years. 7:33 And on to the 7:36 stock chart for Molson. 7:40 As expected the 52 week low 7:44 of Molson is somewhere 7:47 around forty-seven dollars. And the 52-week high is somewhere around $56. 7:53 So the stock has steadily 7:57 increased - not necessarily in a smooth trend since the 8:01 end of February of last year. At the end of February of last year the stock's 8:07 was around forty-eight dollars and 8:11 it osciallated and has gotten as high as $56 in the last three 8:17 months. 8:18 And now its around 55 dollars. 8:21 So the the company 8:24 has gone through modest 8:27 not necessarily incline in price but 8:31 definitely an increase in price 8:37 Just to summarize the financial statement quality 8:42 of Molson Coors is actually 8:45 very good. They have 8:49 some debt. But the debt they have due in five years its 8:54 pretty match manageable 8:58 at three billion dollars. 9:01 Their revenues are at $4 billion-a-year so thats 9:04 thats not much of a problem. Their sales have steadily 9:08 increased over the the last 9:11 five years. Their earnings 9:14 are expected to increase over the next year. 9:18 Their financials are a 9:21 reflection of them doing a lot different things 9:25 that are moving 9:28 the company forward. I think thats part of what we 9:31 believe is the reason for the upside. 9:35 I mean they made an acquisition in 2012, 9:38 its going to help boost 9:42 the stock price in the next year. 9:45 They experienced a bunch of one-time charges 9:48 in 2012 that they won't have to deal with 9:51 at all in 2014. They have been going through 9:56 a number cost-cutting up efforts. 9:59 They've announced plans to retire 10:03 some debt. Also 10:06 they see their market share increasing 10:10 in Eastern Europe. So they've been doing a lot 10:13 of things that at the end of the day we think is going to create 10:18 some nice upside for the stock 10:21 over the next year. So the balance sheet, the financials 10:25 look good. And as we mentioned earlier the operating margin trend 10:29 is improving and might improve even some more 10:34 beyond 2014. 10:38 So the price pattern trend as we've noted is increasing. 10:42 Overall, our market outlook, 10:45 we are still bearish. 10:49 We are definitely not bullish right now. The recent closing price 10:53 for Molson Coors is $55.26. 10:56 And our model predicts 11:00 a 12-month price target $75.04. 11:05 So the 12 month appreciation potential, 11:08 that's 35.8%. 11:12 We think that this company has some nice 11:16 upside. They are doing several things right 11:19 and they are doing it well. On to our 11:23 closing slide. If you haven't already 11:26 sign up for our weekly newsletter. 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