Here’s Why Alcohol Stocks are Heating Up Now

Liquor producers such as Jim Beam (BEAM) are likely to see happier days with a possible deregulation of the government’s controls on the alcohol industry. In an effort to rake in more money, many U.S. states are likely to privatize liquor sales to unlock revenue streams desperately needed to fill budget deficits forecast to reach as high as $103 billion this year.

Tomorrow in Washington votes will be counted on a ballot measure that would end state control of liquor retailing. The proposal is backed by Costco (NASDAQ:COST) and a horde of private distributors. “If privatization does indeed occur in Washington, this could provide additional momentum to similar movements in other states,” said Jared Koerten, an analyst in Chicago for Euromonitor International. The various proposals include making alcohol more widely available and ramping up licensing fees and taxes on liquor outlets and sales. The Washington measure could raise almost $480 million for governments over six years.

On the flip side, however, an independent task force working for the U.S. Centers for Disease Control recommended against further alcohol privatization this year. According to the group studies showed a median increase of 48 percent in consumption after restrictions on an alcoholic beverage are lifted. “Any gains may be wiped out by other costs, from car accidents to domestic violence,” said Michael Scippa, a spokesman for Alcohol Justice, an industry monitor based in San Rafael, California. “Increased availability increases overconsumption, which increases alcohol-related harm,” he said. We’ll be reading more about this cost-benefit analysis in the weeks to come.

Here’s how shares of Costco are trading now:

  • Costco Wholesale Corporation (NASDAQ:COST): The shares recently traded at $83.30, down $0.51, or 0.61%. Its market capitalization is $36.10 billion. They have traded in a 52-week range of $63.91 to $86.34. Volume today was 471,106 shares versus a 3-month average volume of 3,091,390 shares. The company’s trailing P/E is 25.23, while trailing earnings are $3.30 per share. The company pays a dividend of $0.96 per share for a dividend yield of 1.10%. About the company: Costco Wholesale Corporation operates wholesale membership warehouses in multiple countries. The Company sells all kinds of food, automotive supplies, toys, hardware, sporting goods, jewelry, electronics, apparel, health and beauty aids, as well as other goods. Get the most recent company news and stock data here >>