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For the past three years, Zacks senior consumer products analyst Steven Ralston, CFA has kept a Buy recommendation on shares of Anheuser-Busch Companies (BUD). Now, with its stock price creeping back toward its 52-week high, he tells us why he remains bullish on the beer giant:
'Anheuser-Busch Companies is benefiting from industry consolidation of production and a growing international beer presence from management's astute acquisition strategy. Though there are concerns about higher commodity costs, especially energy, agricultural and packaging costs, the results year-to-date demonstrate management's ability to implement productivity programs to offset the negative inflationary effects.
'Valuation, demographic trends, and the significant multi-year 100 million share repurchase program make the stock an attractive investment at current levels. The Buy recommendation is maintained.
'Anheuser-Busch stock has traded in a P/E range of 16 to 27 over the last five years. At the current P/E of 19.0, we find the stock attractive and expect the stock to out-perform. Our target of $65.75 is based on a 24 P/E on trailing 12 month earnings.'
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