Boston Beer Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Boston Beer (NYSE: SAM  ) bubbled as high as 14% in intraday trading Wednesday after the brewer of Samuel Adams raised its full-year 2010 earnings guidance and offered a stronger-than-expected forecast for next year, as well.

So what: Citing a 12% increase in beer shipments over 2009 levels, Boston Beer said it now expects 2010 earnings to range between $3.30 and $3.60 per share, up from its previous forecast of $2.85 to $3.15. More importantly, management felt confident enough in the current tailwinds to offer an initial profit estimate of $3.95 per share for 2011, versus the average analyst estimate of $3.53.

Now what: I'd wait for the shares to flatten out a bit before taking another swing. Fueled by the powerful trend toward craft beer, Boston Beer's shares are up about 120% over the past year and now trade at a forward P/E of 24. While Boston Beer's growth prospects are certainly tasty, cost leaders like Anheuser-Busch (NYSE: BUD  ) and Molson Coors (NYSE: TAP  ) -- which can still get aggressive on price -- might offer Fools the better value today.

Interested in more info on Boston Beer? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Boston Beer is a Motley Fool Stock Advisor choice. Molson Coors is a choice of Inside Value, and the Fool owns shares of it. 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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  • Report this Comment On January 18, 2011, at 5:17 PM, DrJADeLong wrote:

    In August, I took your recommendation and bought 100 shares of SAM at $66.74, today it closed, 5 months later at $92.76. I wish I had bought a thousand shares! It has snuggled up close to the 100 mark, I keep fighting the temptation fo sell at that point. If that have done almost 30 points (close to 50%) in 5 months, where can it go from here. After all, it is a far superior beer to Bud, and Coors Extra Gold is also a big step up over anything Bud offers (except their excellent Clydesdale horses, of course).

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