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Why Boston Beer Stock Rose 21% in May

By Demitri Kalogeropoulos – Jun 4, 2020 at 12:45PM

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Investor enthusiasm for this beer business bubbled up through the broader stock market rally.

What happened

Boston Beer (SAM -0.26%) shareholders outperformed a rallying stock market last month. The stock jumped 21% in May compared to a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally added to April's gains to put shares up nearly 50% so far in 2020.

A man shops for beer.

Image source: Getty Images.

So what

Boston Beer faces many of the same growth challenges that have hurt larger rivals like Molson Coors. Drinking occasions outside the home plummeted in recent months due to COVID-19 containment measures.

Yet Boston Beer entered the crisis period with unusually strong momentum. Sales jumped 32% through late February, the company said on April 22, in part due to consistently strong demand for its Truly Hard Seltzer brand. May's rally was supported by investors pouring into the alcoholic beer specialist's stock with the expectation that its impressive sales trends will see just a temporary disruption from the pandemic closures.

Now what

The consumer staples company will announce fiscal second-quarter results in late July in a statement that will reference the significant pressure from COVID-19 on the business. 

Look for executives to describe sharp sales declines to bar and restaurant partners but a spike in demand at supermarket chains and warehouse retailers. Investors will be more focused on what management has to say about current demand trends as the virus threat subsides.

Demitrios Kalogeropoulos owns shares of Boston Beer. The Motley Fool owns shares of and recommends Boston Beer. The Motley Fool has a disclosure policy.

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