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5 Refreshing Beverage Stocks

06/16/2011 9:30 am EST


Louis Navellier

Editor, Growth Investor, Breakthrough Stocks & Accelerated Profits

This summer, expect to see the beverage sector heat up, so let’s cover some top stocks to buy, suggests Louis Navellier of Blue Chip Growth.

It’s all about beating the heat and the market this summer. With the indexes on a six-week downward slide, you need a diverse portfolio of stocks that can preserve your capital on the down days and rally on up days.

You can’t have a conversation about beverage stocks without covering Coca-Cola (KO) and Pepsico (PEP), so we’ll start there.

It used to be a battle between Coke and Pepsi, but it has become so much more. With each company owning a wide variety of other brands, it doesn’t matter who wins the soft-drink taste test anymore.

Coke makes more than 3,500 different beverages, including Dasani water, Fanta, Fresca, Full Throttle energy drinks, Minute Maid, and Powerade.

Pepsi boasts brands like Frito-Lay, Doritos, Tostitos, Cheetos, Fritos, and Cracker Jack. And don’t forget Quaker oatmeal, Aunt Jemima mixes and syrups, Life cereal, Rice-A-Roni, Pasta Roni, and Near East side dishes.

Both of these stocks are buys, but if I had to pick one, it would be KO. KO stock has the bigger support and better fundamentals this quarter. I like both companies, but KO is the best bet if you can only buy one.

The other three companies I want to talk about aren’t as well known as Coke and Pepsi, but they're worth your attention.

Hansen Natural Corp. (HANS) is an old favorite of mine. I recommended the stock in 2004, and sold it three years later for an incredible 1,125% gain. This is the company behind Hansen’s natural soda and the incredibly popular Monster Energy drinks.

HANS is coming off a strong three-month run. With recent earnings surprises and analysts upping EPS estimates in the last few weeks, I think the company could go on another spectacular run.

National Beverage Corp. (FIZZ), like Coke, owns a number of different beverages. Its products include soft drinks Shasta and Faygo, juice drinks Everfresh, Home Juice, and Pure, and water varieties under the LaCroix, Crystal Bay, and ClearFruit brands.

The stock has been in a tight trading range, but the shares are prone to big moves around earnings. A solid report next quarter could really get this B-rated company moving.

Finally, Diageo PLC (DEO) has adult beverages for every taste.

This is the company responsible for Johnnie Walker, Smirnoff, Baileys Original Irish Cream, Captain Morgan, Jose Cuervo, Tanqueray gin, and Guinness stout—and that’s just some of the alcoholic beverages. There are also a number of wines under the Diageo name.

The stock has been on a nice climb year to date, and it even pays a 2.4% dividend.

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