Take a Sip of Boston Beer in 2014

With a fantastic 2013 already behind it, Boston Beer Company has stumbled into 2014 but nonetheless should remain the top growth prospect in the beer industry.

Jan 11, 2014 at 7:00AM

Thanks to impressive top-and bottom-line growth fueled by the increasing popularity of craft beer, The Boston Beer Company (NYSE:SAM) had a tremendous 2013. Shares of the company soared more than 70% last year and crushed the returns of larger competitors like Anheuser Busch InBev (NYSE:BUD) and Molson Coors Brewing Company (NYSE:TAP).

However, in recent weeks, shares of Boston Beer have corrected sharply, which means they are worth extra consideration at their current levels.

Increasing business diversity
While best known for its signature Samuel Adams Boston Lager beer brand and its many variations, the company has also diversified its business mix in recent years. Boston Beer has found great success with two other brands, Twisted Tea and Angry Orchard. The former is Boston Beer's take on hard iced tea, and the latter is the company's take on hard cider.

The success of both brands has reduced the overall dependence of Boston Beer Company on its signature craft beer brands. However, the company has traditionally done well expanding the Samuel Adams lineup. With numerous seasonal offerings and limited editions, the Samuel Adams brand is ever-evolving. Additionally, Boston Beer introduced the first Sam Can last year, which allows the company's Samuel Adams drinks to be served in cans and in settings that do not allow glass bottles.

Industry-leading growth
Since Boston Beer is one of the smallest public brewers, it may come as no surprise that the company leads its much larger rivals in growth. The following is a breakdown of Boston Beer's projected growth rates for 2014 compared to those of Anheuser Busch InBev and Molson Coors Brewing Company: 


Anheuser Busch

Boston Beer

Molson Coors

Revenue Growth 2014




EPS Growth 2014




Boston Beer leads its larger peers by a wide margin in terms of both revenue and earnings-per-share growth. It is the only listed company in the group that has projected growth above 15% in 2014.

Unfortunately, the company's superior growth comes at a steep price. Boston Beer's forward P/E of 34.41 is extremely elevated in comparison with Anheuser Busch InBev's forward P/E of 18.71 and Molson Coors' forward P/E of 13.2.

Additionally, Boston Beer does not currently pay a dividend, while both of its larger competitors do. Anheuser Busch InBev's dividend yield of 1.3% is solid, but lags behind Molson Coors' dividend yield of 2.3%.

Future growth drivers
Boston Beer's Alchemy & Science division is the company's research and development unit, which is dedicated to finding the next big thing in craft beer. Alchemy & Science is currently finalizing the acquisition of Coney Island Brewery, which will be the fourth beer brand in the unit's lineup behind Angel City Brewery, Traveler Beer Company, and the Just Beer Project. 

Besides creating and acquiring other craft beer brands, the success of Boston Beer is tied mainly to the popularity and future growth potential of craft beer in general. According to a recent report by the Brewer's Association, craft beer represented approximately 6% of the beer produced in the United States through the first half of 2013. 

Craft beer still makes up a very small portion of the domestic beer market and therefore the potential for further market share gains is substantial.

Take a sip
With shares of Boston Beer off to a rocky start in 2014, the time seems right for investors to consider the small brewer as a long-term growth investment. The company is still growing rapidly and remains one of the dominant forces in the fastest-growing segment of the nation's massive beer market.

Looking for other great growth picks?
They said it couldn’t be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he’s ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he’s making this premium report free for you today. Click here now for access.

Philip Saglimbeni owns shares of Boston Beer. The Motley Fool recommends Boston Beer and Molson Coors Brewing Company. The Motley Fool owns 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 Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers