In recent weeks, you may have read about a desire for a mega billion dollar merger between Anheuser Busch InBev SA and SABMiller Inc. In the competitive beverage industry the best method to gain market share is to buy another company, thus margins can be maintained. Which leads to what other choices are there in the beverage industry, given besides water most people drink something and those that drink sometimes consume on a regular basis.

Charles Martin of Thomson Reuters used his company’s data base to look at the answer.

he started with the larger companies or those with a market cap greater than $ 250 million

he was looking for profitable companies with an operating margin of greater than 10%

the return on equity should be higher than 10%

if interest rates, leverage is a concern as a result he wanted firms with total long term debt to capital of less than 60%.

other variables include accounts receivable turnover and dividend yield.

Company                    Ticker     Mkt Cap   Operating   ROE Common  Long Term Debt     Accounts         Dividend

(US $ Bil)   Margin %   Equity  %          to Total Cap %       Receiv  Turn    Yield %

Coca-Cola                  KO-N      180.612         21.0             24.2                  26.4                      9.85                 2.9

PepsiCo                     PEP-N     143.528        14.4               27.4                51.3                      9.80                 2.6

SABMiller                   SAB-L       90.278         19.3               13.3               28.7                      14.00                2.0

Diageo                        DGE-L      70.28           29.3              32.6                41.5                        4.74                3.1

Monster Beverage     MNST-Q     27.672         30.3              30.5                0.0                        8.54                 0.0

Constellation Brands    STZ-N      26.278         24.8              16.9               54.0                       8.41                 0.2

Brown-Forman              BFB-N      22.284         32.8              36.7               24.1                       5.44                0.9

Dr Pepper Snapple        DPS-N     15.864          19.3             31.6                53.0                     9.88                 2.0

Boston Beer                   SAM-N       2.925          16.2             22.6                 0.1                      17.58               0.0

National Beverage        FIZZ-Q         1.467         11.6             35.3                 6.3                      10.93               0.0

AG Barr PLC                  BAG-L          .931         14.9             19.1                 8.7                      5.54                 2.3

Nichols  PLC                   NICL-L        .791           16.3            38.1                 0.0                      4.86                1.6

Fevertree Drinks           FEVR-L          .765           23.3            20.2                 9.9                      5.06               0.1

Corby                            CSW-T           .412            20.6           10.3                 0.0                       5.1                4.0

Linking to dividend paying stocks, there are many choices in the marketplace and charts such as this one allows you to narrow down the choices in order to reduce the risks. If you were concerned about possible targets it would be important to look at how many shares are in friendly hands or what premium would have to be paid. There are other paths to take however the use of the charts allows you to narrow the choices.

There are more questions than answers, till the next time – to raising questions.