Time To Enjoy Some Sam Adams?

Beer is in a bull market, there is no doubt about that. Not only are we experiencing a craft beer revolution, but major beer companies are also experiencing the fruits (or should I say hops?) of this boom. Most of the publicly traded “beer corporations” are at or near all-time highs. Names like Molson Coors ($TAP), Anheuser-Busch ($BUD), and Constellation Brands ($STZ) all have hit all-time highs at some point this summer.

However, one other company has caught my eye, and that is The Boston Beer Company ($SAM). Boston Beer produces the infamous Samuel Adams beer along with some other smaller names. Here’s why I like it.

The Chart

Below is a weekly chart of $SAM spanning back to late 2008. You can see that this name has been in a nice bull market since it bottomed in 2009. It is up about 1,185% from the ultimate low set in March 2009. While that has certainly outperformed the market, I don’t see it slowing down soon. One thing I noticed is that this name likes to consolidate after big runs and do it again. It has “rinse-and-repeated” this pattern over the last few years. I see no reason why it wouldn’t continue to do the same. However, one thing I like about this coiled sideways pattern is the length of time it has consolidated. The bigger the pattern, the bigger the move.

I would be long as long as the pattern is “holding”. Personally, I’ll set my stop anywhere below $210 and $200. If this breaks out, we can be looking at a measured move of about $45 to 275. But I would expect this at $300 if we were to witness a breakout (the breakout would “trigger” around 230-235). So given the risk-reward, I love this trade over the other names.

$SAM Weekly Chart 

SAM Weekly


And I’m not the only one who likes this stock. Josh Brown (@ReformedBroker) gave his bull case on CNBC on Monday (September 15, 2014). The video is below. He believes the company is a potential buyout candidate given it’s small market cap (About 3B!). Also, check out this fundamental breakdown from Estimize – beer might not be the only thing that helps this stock head higher.


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