It makes beer and has made huge profits for shareholders over the past year. So, is Molson Coors an investor's dream come true?
Shares of the largest Canadian brewer (and sixth-largest in the U.S.) are up 28 percent so far this year. And according to Bank of America Merrill Lynch, it may be a good idea to keep stocking up on Molson Coors in your portfolio.
BAML's analysts have upgraded the stock to a "buy" from "underperform" and havegiven the company a price target of $80 per share. As of Wednesday, the stock traded at record highs above $70.50. Besides expecting improvements in the company's European and U.S. sales, BAML's Bryan Spillane and Lisa Lewandowski also see the possibility that Molson Coors could acquire the remaining shares of its joint venture Miller Coors from London's SABMiller.
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That's quite a different story from a couple of years ago, when the company saw its revenue cut in half to just $3 billion in 2009, from $6.2 billion in 2007. Since that time, Molson Coors has seen a steady comeback. The company sold $4.2 billion of beer, beer, and more beer over the past four quarters.
Gina Sanchez, founder of Chantico Global, sees more room for the company to grow as it currently stands. And, she also likes Molson Coors' dividends. "They're boosting their profitability," she said. "At the same time, they're a big dividend payer, and they've been increasing that dividend."
Molson Coors had been paying out $0.64 per share for several years until 2008. By 2013, it was double that amount. Along the way, the market cheered the brewer. Molson Coors shares finally broke above its 2008 highs of $59.51 in mid-March and have been gaining ever since.
Although "their valuation has certainly caught up with the enthusiasm," notes Sanchez, a CNBC contributor, "there's still some room to go, assuming that we continue with even the weak economic recovery."
But, according to Richard Ross, global technical strategist at Auerbach Grayson, now is not the time to buy Molson Coors. Well, at least as far as the stock is concerned.
"There's a lot of momentum here, but I don't think this is a very compelling entry point for longer-term investors," said Ross, a "Talking Numbers" contributor.
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Ross sees the stock of Molson Coors as just recently having broken out of a well-defined multiyear trend channel. "Typically, that's not a great place to chase the stock," he said. "If you want to be a buyer, you can be a better buyer on a pullback to the high end of that trend channel, which should act as support on the way back down."
Nonetheless, Ross' long-term chart for Molson Coors is bullish. He sees the stock as having built a multiyear base of support beginning in 2009 and breaking out once it moved above $50 per share. He just thinks the stock can be bought cheaper than it is today.
"It ticks a lot of boxes in terms of momentum, relative strength, [and] nice chart breakout," Ross said. "But, on the same token, all that's in the past. We're paying for the future here. Once again, I think you get a better entry point at a lower level."
To see the full discussion on Molson Coors, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.