Boston Beer has plenty of room to grow
The craft brewer makes up less than 1.5% of the US market, and analysts are bullish on the stock.
By Eric Dutram
While giant brewers like Budweiser (BUD) and Molson Coors (TAP) still dominate the U.S. beer market, craft brewers have managed to carve out a decent-sized niche for themselves. And on a recent "fact-finding mission" that I took to the headquarters of Boston Beer Co. (SAM) in Massachusetts, I can see why many have embraced these smaller brewers.
Not only do companies like Boston Beer offer an arguably better beer, but you can tell that there is a great level of care put into the product as well. Many consumers have noticed the flavor -- or at least the uniqueness -- and have allowed Boston Beer to grow into the great position it finds itself in today.
Yet even with the solid level of growth that the company has seen so far, SAM makes up less than 1.5% of the total U.S. market, suggesting that Boston Beer clearly has plenty of room to grow. For this reason, and America's current obsession with craft beer, this brewer of Boston Lager could be worth a closer look.
SAM in Focus
The growth for Boston Beer can best be seen in the recent earnings estimate revision trends for the company. Analysts clearly like the craft beer story too, as not a single estimate has gone lower for Boston Beer in the past 60 days, while when zeroing in on the current year, three estimates have gone up.
The magnitude of the increases has also been impressive, with the current year surging from $5 a share 90 days ago to the current level at $5.36. Current quarter estimates have also jumped, suggesting that analysts are quite bullish on the company’s prospects.
But don't worry about SAM being able to live up to the hype, as the firm has a pretty solid track record at earnings time. It has beaten in three of the last four earnings release dates, while its Zacks ESP is positive, suggesting that it is well positioned to beat this quarter as well.
Thanks to these factors, SAM has earned itself a Zacks Rank #1 ("strong buy"), meaning that we are looking for some more outperformance in the weeks ahead. And considering how well Boston Beer did following the last earnings report, this should definitely be a stock on your radar.
Not all craft beer is equal
While Boston Beer is well positioned for further gains, it is important to remember that not all the stocks in the ‘beverages-alcoholic’ industry are as highly ranked. In fact, Boston Beer is actually the cream of the crop from the Zacks Rank perspective, as it is the only one that has a No. 1 rank.
Meanwhile, one of its top craft brew competitors, the Craft Brew Alliance (BREW), is one of just two stocks that has a Zacks Rank of 5 ("strong sell") in this industry. So, if you are looking for a beer play in the craft space, you should probably look to SAM over BREW for hopes of better performance in this in-focus industry.
I'VE ALWAYS LIKED IMPORTS WHEN I WAS YOUNGER. NEVER LIKE BUD AND LIGHT AND
LIME? YUK! PLATINUM? GIVE ME A BREAK! MILLER LITE? YUK! COORS LITE? YUK! SAMUEL
ADAMS IMPERIAL ALE IS MY FAVORITE AMERICAN BEER AND THEN MC EWAN'S SCOTCH
ALE IMPORT! IT'S ALWAYS BEEN TASTE FOR ME. MOST MICRO BREW BEERS ARE REALLY
GOOD AND SO MUCH BETTER THAN BUD MILLER COORS HORSE PISS! I DON'T LIKE FRUIT
BEERS THAT ARE COMING OUT WHERE ALL YOU TASTE IS SWEET FRUITY TASTE! THAT
IS GIRLY BEER! I HOPE SAM ADAMS AND MICRO BREWED BEERS TAKE OVER THE MARKET!
I'M SICK OF THE BUD MILLER LITE COORS BEER COMMERCIALS THAT HAVE NOTHING 2 TO
WITH BEER AND JUST STUPID POOP STARS AND SHAPE OF THE BOTTLES AND NOT TASTE!
BULLDOG? TIMBERLADY? PUFFY? JAY Z? BUNCH OF NO TALENT THUG RAPPERS.
It's a good beer, but overrated.
And why, for God's sake, do they insist on putting spices and junk in their beers?
Malt. hops and barley. Anything else is for morons that don't like the taste of beer.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
For years, Todd Mills pushed Frito-Lay to make taco shells from Doritos. He died from a brain tumor on Thanksgiving.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.