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Stock Markets Fall Friday as Gold Hits $1,900; Boston Beer Gets a Big Bottom-Line Win

By Dan Caplinger – Jul 24, 2020 at 5:02PM

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Despite a downbeat day on Wall Street, there were some reasons to celebrate.

Concerns about relations between the U.S. and China continued to add to stresses related to the coronavirus pandemic on Friday, pushing stock markets broadly lower. The declines were relatively modest, however, with the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite all limiting their losses to less than 1%.

Today's stock market

Index

Percentage Change

Point Change

Dow

(0.68%)

(182)

S&P 500

(0.62%)

(20)

Nasdaq Composite

(0.94%)

(98)

Data source: Yahoo! Finance.

Amid the rising levels of tension, demand for gold has emerged among investors as a potential safe-haven play. Yet what was truly surprising today were the earnings results that Boston Beer (SAM -0.26%) posted, as the maker of Sam Adams and other beer brands has managed to achieve amazing growth even in the middle of the pandemic.

Raise a glass

Boston Beer shares jumped 26% on Friday, adding to huge gains so far in 2020. The beer maker's second-quarter financial results confirmed the amazing performance that its business has achieved recently, and shareholders are optimistic about the company's future as well.

Financially, Boston Beer remained in growth mode. Revenue jumped 42% from last year's quarter, lifted in part by the acquisition of Dogfish Head a year ago. Earnings more than doubled year over year to $4.88 per share.

Glass of beer with Samuel Adams logo, along with pictures of hops and a person.

Image source: Boston Beer.

Boston Beer did take a hit from the COVID-19 pandemic, as keg demand from bars and restaurants plunged amid forced closures. The company also had to bear higher production costs due to safety measures.

However, the big success stories were Truly Hard Seltzer and Twisted Tea, both of which have prospered even as competing products have failed to get much traction. Overall, depletions soared more than 40% from year-ago levels, even excluding the impact of adding Dogfish Head, and shipment volumes jumped 35% organically.

With the gains, Boston Beer is now up 120% in 2020 and more than 500% since mid-2017. That's a big jump for a beverage company , but Boston Beer has its finger on the pulse of consumer demand -- at least for now.

Glittering gold

Meanwhile, the precious metals markets continued to perform well. Gold prices were up $14 to $1,901 per ounce, while silver was up about $0.19 to just under $22.75 per ounce. Platinum eased lower, but palladium prices climbed more than 2%.

Gold's popularity showed up in prices of related stocks. Streaming specialist Wheaton Precious Metals (WPM -4.39%) picked up more than 5% on the day, while gains for mining companies Harmony Gold (HMY -6.10%), Yamana Gold (AUY -6.26%), and DRDGOLD (DRD -8.68%) all topped 8%.

Investors appear increasingly convinced that gold and silver could be in a new bull market. Gold is nearing its all-time record levels, but silver could double and still be shy of where it traded in the early 2010s. For gold, the perceived stability of the yellow metal in geopolitical turmoil has been its main supporting argument. Silver, meanwhile, has enough industrial uses to benefit from hopes for an economic recovery.

Precious metals prices are often volatile, and gold could give up its gains just as quickly as it moved higher. Yet with fundamental conditions favoring investors, gold has the potential to keep climbing from here as well.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Boston Beer. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wheaton Precious Metals Corp. Stock Quote
Wheaton Precious Metals Corp.
WPM
$30.04 (-4.39%) $-1.38
The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
SAM
$317.64 (-0.26%) $0.84
Yamana Gold Inc. Stock Quote
Yamana Gold Inc.
AUY
$4.04 (-6.26%) $0.27
Harmony Gold Mining Company Limited Stock Quote
Harmony Gold Mining Company Limited
HMY
$2.00 (-6.10%) $0.13
DRDGOLD Limited Stock Quote
DRDGOLD Limited
DRD
$4.84 (-8.68%) $0.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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