Market Overview

Boston Beer and Starbucks to Open Near 52-Week Highs


The Dow and the S&P 500 closed up almost 3% yesterday, and beverage companies Boston Beer (NYSE: SAM) and Starbucks (NASDAQ: SBUX) reached new 52-week highs of $106.97 and $45.15 per share, respectively, in the trading session.

Boston Beer has seen stronger growth than its larger rivals, and the company recently said it will raise per-barrel prices 2.5% to 3.5% next year to help offset rising commodity costs that have hit the industry. The craft brewer is headquartered in Boston, of course, and produces Twisted Tea and HardCore cider in addition to Sam Adams beers. It was founded in 1984 and now has a market cap of $1.4 billion.

Its earnings per share are anticipated to grow 9.1% over the next five years. The P/E ratio is higher than the industry average but so is its operating margin. The return on equity is a healthy 35.6%. But note that short interest is a hefty 20.5% of the float. The share price is up about 50% from the 52-week low in October. Over the past six months, the stock has outperformed Craft Brewers Alliance (NASDAQ: HOOK) and Diageo (NYSE: DEO).

Starbucks boosted its dividend and reported better-than-expected results in the most recent quarter, driven by strong same-store sales. And last week it elected social media guru Clara Shih to its board. The company operates more than 16,800 stores throughout the world and is still expanding. The Seattle-based company has a market cap is $33.6 billion and it was founded in 1971.

The P/E and PEG ratios are a bit above the industry average, but so is the operating margin. The long-term EPS growth forecast is 17.5%, the return on equity is 30.9% and the dividend yield is 1.5%. The consensus recommendation of analysts is to buy the stock. The share price is up more than 13% in the past 90 days, as well as more than 39% higher than a year ago. The stock has outperformed competitors Dunkin Brands (NASDAQ: DNKN) and McDonald's (NYSE: MCD) over the past six months.

Posted-In: 52-Week Highs boston beer Clara Shih Craft Brewers AllianceLong Ideas Short Ideas Pre-Market Outlook Trading Ideas


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