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Why these drinks companies could leave you with a headache
Most global brewers are not returning enough on their invested capital and that's why investors can have a tough time if drinks companies are part of their portfolio. So says Saxo Bank's Head of Equity Strategy, Peter Garnry who's investigated the eight largest brewers in the S&P 1200 Global Index. He says the three brewers that deliver excess return on capital are the three largest in terms of invested capital and market capitalisation.
Moreover, canny traders need to be looking for companies with the highest exposure to fast growing markets in Latin America and Asia. Pete is particularly impressed with Ambev, traded on the NYSE. He says they have tremendous global reach and have performed well for the past fifteen years and almost sixty per cent of their revenue comes from the LatAm region.
More disappointing are Carlsberg and SABMiller. Peter says despite being large, Carlsberg has made some unfortunate strategic decisions over the past few years. SABMiller, he says, just aren't getting enough out of their assets and their Return on Invested Capital just isn't good enough to justify their valuation.
01:42 minutes
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