Molson Coors Canada Inc. $50 – Toronto symbol TPX.A

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $50 and TPX.B $50; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 183.6 million; Market cap: $9.2 billion; SI Rating: Average) recently merged its brewing operations in the United States into a new joint venture with the parent company of Miller Brewing. Molson Coors has a 50% voting stake in this new company, called MillerCoors, although just a 42% economic interest. MillerCoors aims to cut its annual costs by $500 million (all amounts except share prices and market cap in U.S. dollars). Molson Coors is also making good progress with its own plan to cut annual expenses by $250 million. Thanks partly to these savings, Molson Coors earned $175.8 million in the third quarter of 2008, up 1.5% from $173.2 million a year earlier. Earnings per share were unchanged at $0.95. These figures exclude unusual items. Sales fell 45.3%, to $921.1 million from $1.7 billion, because accounting rules force the company to exclude MillerCoors’ revenues following the merger. On a comparable basis, sales at MillerCoors rose 2.1%. The shares now trade at 13.7 times the $2.95 U.S. a share that Molson Coors will probably earn in 2008. The $0.80 U.S. dividend yields 2.0%. Molson Coors is a buy. The ‘B’ shares are the better choice.