In 2015, Anheuser-Busch stock hit a high of $130. This year, Anheuser-Busch hit a high of $136. The valuation of the stock was between 25x and 27x earnings, which made no sense to me given that the core brands were either stagnating or in decline (for example, Bud Light in 2016 ships out 10% less than it did in 2008). Even with 3G management taking aggressive action to raise the profit margin from 8% to 18%, the lack of organic sales growth meant that Anheuser-Busch didn’t deserve the type of premium you might pay for Visa, Alphabet, or Nike.
If you bought Anheuser-Busch at those valuation, you were probably setting yourself up for mid single digit returns. Nothing wrong with that–as long as you’re above 3.5% or so the decision to delay gratification still ends up making you richer–but I like to aim the bow a little higher and aim … Read the rest of this article!