5-Star Stocks Poised to Pop: Boston Beer
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, craft brewer Boston Beer (NYS: SAM) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Boston Beer's business and see what CAPS investors are saying about the stock right now.
Boston Beer facts
|Headquarters (founded)||Boston (1984)|
|Market Cap||$1.3 billion|
|Trailing-12-Month Revenue||$513.0 million|
|Management||Founder/Chairman James Koch|
President/CEO Martin Roper
|Return on Equity (average, past 3 years)||29.1%|
|Cash/Debt||$49.5 million / $0|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 96% of the 1,503 members who have rated Boston Beer believe the stock will outperform the S&P 500 going forward.
1) Industry trends: We continue to see the effects of the trade up effect as customers are electing to purchase the pricier more flavorful brands of beer rather than go out to the bar. This is driving growth in the craft beer segment despite negative growth in the beer industry as a whole.
2) Fundamental business: One of the most important things in craft beer sales is the establishment and maintenance of a strong brand name, which Boston Beer has. Their strong free cash flows are more than enough to continue to finance and aggressive marketing strategy. Also, their larger size relative to their craft beer competitors give them a scale advantage that allows for pricing power now, and will allow Boston Beer to beat out their competitors as a pricing war starts in the near future.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Boston Beer. Motley Fool newsletter services have recommended buying shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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