Boston Beer (SAM)
From Cabot Wealth Advisory 5/31/12 Sign up for free Cabot Wealth Advisory e-newsletter
I usually confine myself to stocks that get a majority of their revenue from China and the other emerging markets, but I'm going to stick very close to home today and recommend Boston Beer Company (SAM), a company that began the revival of the Boston brewing tradition in 1984. With Samuel Adams Boston Ale and Sam Summer leading the pack, the company's product lineup includes Twisted Tea, hard cider and a raft of flavored, seasonal and occasional beers.
Boston Beer has a solid revenue picture, with double-digit revenue growth in six of the last seven years and earnings that are projected to increase from $3.72 per share in 2011 to $4.18 in 2012. A Q1 earnings report featured a 100% jump in earnings. Distribution is wide and growing with exports heading to Canada, Europe, the Caribbean, the Pacific Rim and Mexico.
SAM is a thinly traded issue (just five million shares in the float and an average trading volume of just 115,000 shares a day), but it has a technical setup that looks quite positive to me. SAM touched 115 briefly at the end of 2011, and has traded sideways ever since. Except for one dip to 94, the stock has traded mostly in a range between 98 and 108 for the last five months. And the last two weeks have seen a significant tightening into a range between 104 and 107. That's a pattern that frequently presages a move of some consequence.
After a long pause in its long-term rally, Boston Beer looks like it should have good support once it breaks out of this holding pattern. Look to get in on a rally above 110.
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|Boston Beer (SAM)
One Design Center Place
Boston, Massachusetts 02210
|Index Membership: N/A
Sector: Consumer Goods
Industry: Beverages - Brewers
Full Time Employees: 840