Molson Coors Canada Inc. $51 – Toronto symbol TPX.A

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $51 and TPX.B $45; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 145.6 million; Market cap: $7.1 billion; SI Rating: Average) is the world’s fifth-largest brewer. The company is steadily expanding its portfolio of premium brands, mostly through deals with foreign brewers. For example, a new distribution deal with Mexican brewer Modelo expands the availability of the popular Corona brand in Canada. Molson Coors also continues to focus on cost controls. In the first nine months of 2007, it found $109 million in annual savings (all amounts except share price and market cap in U.S. dollars). A new deal to merge its operations in the U.S. and Puerto Rico with those of rival brewer Miller will cut annual costs by a further $500 million. To put these figures in context, Molson Coors earned $0.95 a share (total $173.2 million) in the third quarter of 2007, up 23.4% from $0.77 a share ($134.3 million) a year earlier. These figures exclude unusual items. Sales grew 6.3%, to $1.7 billion from $1.6 billion. Earnings in 2008 should grow to $3.05 U.S. a share, which implies a p/e of 16.7 (14.8 for the ‘B’ shares). The $0.64 U.S. dividend yields 1.3% (1.4% for the ‘B’). Molson Coors is a buy. The cheaper ‘B’ shares are the better choice.