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Tap Into This Cheap Beverage Maker

In the somewhat frothy consumer defensive sector, alcoholic beverage producers look cheap.


Erin Lash: The consumer defensive space once again lagged the broader markets' recovery in the third quarter through the beginning of September, chalking up a low-teens percent gain versus the mid-teens amassed by the broader market.

Despite this more tepid performance, we continue to view the consumer defensive space as slightly overvalued, trading at a 4% premium in aggregate to our assessment of intrinsic value. This outsized valuation is particularly pronounced within the consumer packaged goods and defensive retail subsectors, which trade at high single- to low double-digit percent premiums relative to our fair value estimates. Despite this, we continue to see value within the alcoholic beverage arena, which trades in aggregate at nearly a 15% discount to our intrinsic valuations.

Erin Lash does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.