The Motley Fool

Why I Love SABMiller plc

There is plenty to love about globally-diversified brewer SABMiller (LSE: SAB) (NASDAQOTH: SBMRY.US). Here are five flavoursome reasons why I like it.

It’s nice to invest in something you understand

Sometimes, it can take time to get your head around what a business really does. How big is the market for a tech company’s processors and peripherals? I don’t know. What exactly is a mobile phone unified communications strategy? Search me. Will a drug company’s new hyperactivity treatment pass late-stage tests? No idea. Beer, however, is something I do understand. SABMiller brews it, millions of people around the world drink it. As business models go, this is as straightforward as it gets. And as tasty.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Investors are swallowing it

Over the last five years, SABMiller’s share price has grown an intoxicating 254%, against a relatively sober 60% on the FTSE 100. This reflects the strength of its premium global brands, which include Peroni, Grolsch, Guinness, Miller, Pilsner Urquell and Fosters, combined with its strategy of targeting popular local brews and developing high-end brands (I’m curious to try Redd’s Apple Ale). Beer will never go out of fashion, but I’m still pleased to see SABMiller diversifying into soft drinks especially since sales grew 23% in the first-half of this year, against just 1% for lager.

It’s a truly global operation

Emerging market exposure is vital for any company, as the US and Europe continue to struggle. SAB Miller’s European adjusted earnings fell 1% to $512 million after an unseasonably cold and wet start to the year, but rose 15% in Africa to $408 million, with strong sales in Tanzania, Gambia, Ghana and Nigeria (the world’s biggest market for Guinness, astonishingly). In Latin America, its largest market, sales grew 6% to $972 million. SABMiler is also posting double-digit group revenues in China. There’s a world of beer out there.

The numbers look good

SABMiller’s share price jumped 3% on publication of its first-half results, which showed a 4% rise in adjusted earnings to $3.27 billion. This was seen as an encouraging performance, especially since earnings had been hit by a decline in key currencies against the strengthening dollar, notably the South African Rand. Adjusted earnings in South Africa were down 8%, yet actually grew on a constant currency basis, thanks to the success of Castle Lite and Castle Milk Stout.

The froth is starting to settle

Just two things put me off SAB Miller, and both are signs of success. Right now, it trades at a high-strength 21 times earnings and yields a weak 2.4%, despite a 4.4% increase in the half-year dividend share. That’s what happens when you grow 254% in five years. But some of the froth is coming off this stock, which is down nearly 7% in the past six months. I like my beers flat rather than fizzy, and it might be time to get my order in.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

> Harvey does not own shares in SABMiller.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.