Why Molson Coors Brewing Company Shares Could Pop to $80

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Molson Coors Brewing Company (NYSE: TAP  ) gained 1.5% today after Bank of America upgraded the beer giant from underperform to outperform.

So what: Along with the two-notch upgrade, analyst Bryan Spillane boosted his price target to $80 from $55, representing about 13% worth of upside to yesterday's close. While contrarian traders might be turned off by Molson's price strength during the past year, Spillane's call could reflect a sense on Wall Street that its improvement potential still isn't fully baked into the valuation.

Now what: According to B of A, Molson's risk/reward trade-off remains rather attractive at this point. "Key factors to consider are : 1) Prospects for a solid performance in Europe, potential improvement in the US tied to improving economy, easier comparisons and Miller Coors marketing initiatives, 2) improvement in cash flow and total shareholder returns enabled by a broader application of the companies PACC (EVA like) model, 3) Canadian cost savings initiatives should begin to have more of an effect later in 2014 and into 2015, and 4) Increased appreciation in the market for the value (to TAP) of the Miller Coors JV including the accretive scenario of TAP buying out its partner," said Spillane. More important, with Molson continuing to sport a reasonable forward P/E in the mid-teens, and a solid 2% dividend yield, the downside might still be limited enough to bet on those catalysts. 

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2990847, ~/Articles/ArticleHandler.aspx, 10/25/2014 3:02:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 16,805.41 127.51 0.76%
S&P 500 1,964.58 13.76 0.71%
NASD 4,483.72 30.92 0.69%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2014 4:01 PM
TAP $73.23 Up +1.89 +2.65%
Molson Coors Brewi… CAPS Rating: ****

Advertisement