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Buying Beam May Drive You to Drink

Stocks in this article: BEAM DEO HLF JCP

NEW YORK ( TheStreet) --The stock market has been falling like a drunken sailor, making it a good time to look at two big names in the business of booze, Beam (BEAM) and Diageo (DEO).

Friday, it was DEO that took it on the chin, falling about 2.4% while BEAM, which trades at a much higher forward (one-year) PE ratio, was flat on a day when the S&P 500 fell below the 1,800 level and the Dow cratered below 16,000. BEAM trades with a forward PE of about 30 while DEO's is much lower at 17.

Currently, DEO is trading around $127 and is down 4% for the year to date. Beam is trading around $84 and is up 23% for the year to date.

Beam's product line includes Jim Beam Bourbon, Courvoisier Cognac, Canadian Club Whisky and Teachers Scotch, among many others. BEAM was formerly Fortune Brands and changed its name to Beam Inc. in October 2011.

On Jan. 22 Beam declared a regular dividend of 22.5 cents per share on the company's common stock, payable in cash on March 3, 2014 to stockholders of record at the close of business on Feb. 6. Through a company-wide focus on innovation in both product and marketing, Beam has grown to become the fourth largest premium spirits company on the planet. For more information, see the company's Web site.

Here's a one-year price chart that has an impressive spike higher just before the middle of this month.

BEAM Chart BEAM data by YCharts

What launched the price of BEAM's stock through the roof? On Jan. 13, Suntory Holdings agreed to buy Beam for $16 billion including the assumption of BEAM's debt. Not all shareholders are thrilled about this transaction, however.

On Jan. 22 the NECA-IBEW Pension Trust Fund filed a lawsuit in Circuit Court of Cook County, Illinois. According to Bloomberg, "...the proposed transaction is the product of a 'hopefully flawed process'"  designed to ensure the sale on Beam to Suntory "on terms preferential to defendants and other Beam insiders."

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