BUD [Archive]

**shu_wd** Mon Apr 25, 2005 2:18 am

BUD
hi, Blast,

How about BUD? Both insider and Buffett buying. Some articles I read recommend it and think it has big "moat".

thanks,

**blast_investor** Mon Apr 25, 2005 8:57 pm

This is new Buffet pick. I like its business model. It is clearly a typical Consumer Monopoly stock that Buffet likes most.

The one thing that hold me back on BUD is its valuation. Over past 5 - 10 years BUD had about stable earning growth of 11% - 12% per year and it is trading at PE = 17.

Therefore, I see this as 10% - 15% return stock. Buffet already said in his annual report that he is happy with 10% return so that BUD will do this for Buffet safely.

If you want to look for performance more than 10%, you probably can not expect too much from this stock BUD.

**goog** Mon Oct 31, 2005 1:13 am

Current issue of Barron's has a very long artical about Bud. Basically it is bullish about the stock. The key points are:
1. Valuation is attractive
2. Beer sale may see growth in coming years. History showed the cycle.
3. High international growth potential
4. New products introduced.

**nodoodahs** Thu Feb 16, 2006 1:53 pm

Per http://finance.yahoo.com/q/ae?s=BUD , BUD had annualized 7.1% EPS growth last five years and projected annualized 8.3% for next five, for PEG of 2.08. Price/Book is outrageous at 9+ and the D/E is too high for my tastes, 2.4. Current ratio sucks, no cash on board, lousy metrics in my opinion.

With a 15% discount rate, that growth merits PE of 14.9. If you use an 11% discount rate, it merits a PE of 37. I typically use the higher 15% discount rate, making BUD unattractive to me. Valuation is attractive? Compared to what? Have they been drinking BUD? Too much beer makes things that are truly unattractive seem so, at least near 3 a.m.

This stock has lots of overhead supply. If it got near $44.50 without showing strength in at least 3 indicators, I would be tempted to short it with a stop just north of $45.

Might be a good company, lousy stock to buy. While the brand may have some power, those most likely to drink lots of beer (alcoholics) don't have brand loyalty. IMO it's a lousy beer, too. Anyone can market and make beer, there are no barriers to entry. Company is so big it will be hard-pressed to outgrow the natural growth of beer-drinking itself, what you want is a stock that can grow faster than its target market, not one that is limited by its target market.

**yhan** Fri Feb 17, 2006 7:57 pm

My question is : if someone (including Buffet) wants 10% annual return, h/she can go with S&P 500 index. History shows that you can acheive that without spending time to pick stocks, and 85% mutual funds performed under S&P 500 index.

so why wasting time to pick stocks?

**goog** Fri Feb 17, 2006 8:13 pm

Buffet doen't think S&P 500 can deliver !0% in the future. I believe BUD has better valuation and potentials than the index.

yhan wrote: My question is : if someone (including Buffet) wants 10% annual return, h/she can go with S&P 500 index. History shows that you can acheive that without spending time to pick stocks, and 85% mutual funds performed under S&P 500 index.

so why wasting time to pick stocks?

**blast_investor** Fri Feb 17, 2006 10:58 pm

I believe BUD performance is going to beat index. S&P500 as a stock has pretty poor valuation and poor outlook for the next 5 to 10 years.

goog wrote: Buffet doen't think S&P 500 can deliver !0% in the future. I believe BUD has better valuation and potentials than the index.

**springsnailt** Thu Mar 23, 2006 6:25 pm

I took a look at BUD. The US market is pretty much saturated. With 48% of the market share, BUD would be lucky if it doesn't lose much to TAP or Miller. The promotion has driven beer price down recently. The growth would be more likely from two directions:

1. productline extension. banking on bud's financial power and brand recognization, expand to other alchoholic drinks.
2. international growth. bud current has extensive exposure in china and mexico.