Molson Coors Beverage Company (TAP): A Bull Case Theory

We came across a bullish thesis on Molson Coors Beverage Company on Scalper's Lounge’s Substack by scalpavelli. In this article, we will summarize the bulls’ thesis on TAP. Molson Coors Beverage Company's share was trading at $46.86 as of September 17th. TAP’s trailing and forward P/E were 9.24 and 8.04 respectively according to Yahoo Finance.

Molson Coors (TAP) recently traded near $47.50, a level identified as a strategic entry point by analysts, prompting interest from investors seeking upside through both equity and options strategies, with potential gains of roughly 13.7% over four months, including dividends. The company trades at an expected near-term GAAP earnings yield of 11%, rising above 13% when adding back $200 million of goodwill amortization. Combined with a 4% dividend, this provides ample cash flow for debt reduction, reinvestment, and share repurchases.

TAP successfully reduced leverage to a 2.5x EBITDA target in 2024, and management has begun aggressive buybacks while reaffirming its commitment to steadily increasing the dividend. Low operating leverage supports cash flow stability, insulating the company from downside scenarios, such as a $1 billion revenue shortfall, effectively offset by the goodwill adjustment. The brand portfolio—including Coors, Miller Lite, Foster’s, Peroni, Blue Moon, Leinenkugel’s, and Redd’s—is strong, complemented by strategic investments in Fever tree and collaborations on hard seltzers, demonstrating growth potential in both traditional and emerging beverage segments.

Potential headwinds include leverage concerns and declining college demographics affecting the economy beer segment, but the current valuation presents an attractive entry point. Near-term earnings releases are likely to stabilize market expectations, highlighting the resilience of underlying cash flows. Overall, TAP represents a stable, cash-generative business with strong brand equity, ongoing strategic initiatives, and the potential for debt reduction and rerating, offering a balanced risk/reward profile for investors.

Previously we covered a bullish thesis on Molson Coors Beverage Company (TAP) by Tyler Moody in September 2024, which highlighted the company’s stable mid-cap status, conservative financing, modest undervaluation, fair dividend yield, and defensive positioning. The company's stock price has depreciated approximately by 15% since our coverage. The thesis still stands as TAP continues to generate steady cash flow. Scalpavelli shares a similar bullish view but emphasizes strategic entry points, optionality through equity and options, and near-term upside from debt reduction and brand initiatives.

Molson Coors Beverage Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held TAP at the end of the second quarter which was 45 in the previous quarter. While we acknowledge the potential of TAP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.