2018 Investment Series Post 6

Everyone loves payday. Just like everyone else, once I get that sweet deposit in the bank it starts burning a hole in my pocket. Before much time I am ready to blow it all on a shopping spree. My store of choice is the stock market, and I’m shopping for the best deals on companies. Here is what I dropped my $1,000 on this Friday, March 16th

Craft Brew Alliance Inc (BREW)

The sixth pick of the Let’s Be Millionaires investment series goes to Craft Brew Alliance Inc. (BREW)

The Craft Brew Alliance is the 5th largest craft brewing company in the United States.  The craft brew alliance consists of  Kona Brewing Company, a dynamic, fast-growing national craft beer brand, and seven strong regional breweries and innovative lifestyle brands: Appalachian Mountain Brewery, Cisco Brewers, Omission Brewing Co., Redhook Brewery, Square Mile Cider Co. and Widmer Brothers Brewing.

Honestly, I would be lying if i said that this decision had nothing to do with the fact that their ticker symbol is “BREW”. Check out Craft Brew Alliance Inc.

About The Stock

Craft Brew Alliance Inc. (BREW) has been a publicly traded company since 1995. After going public the stock proceeded to go on a 5 year downtrend dropping from $30 per share all the way down to lows of around $1.50 a share in the year 2000. The stock then recovered to highs of almost $8 a share before crashing with the broader market in the great recession. The stock has since climbed. If you picked up the stock at its all-time lows of around $0.90 you would have enjoyed a gain of nearly 2000% between 2009 and now. The stock hit highs of around $20 a share back in 2016 and is now returning towards those levels after a pullback that took place between the end of 2016 and the beginning of 2017. At just under $19 a share I am a buyer. I am banking on this brew aging nicely.

I am not the only one who is banking on solid growth from the company considering that it boasts a ridiculous 140 P/E ratio currently. I am taking this with a grain of salt however since the company is investing a lot of money into growing both its portfolio of brands as well as the individual brands themselves. The Craft Brew Alliance has a market cap of just around $360 million dollars.

Craft Brew Alliance Inc. can be categorized as a domestic, small-cap, consumer-discretionary growth stock.

The Speculation

The beverage industry has been consolidating at a rapid pace. Years ago we saw Miller and Coors merge to form Miller Coors and in 2008 Anheuser-Busch was purchased by the Belgian brewing giant, Inbev. As craft beer has begun to gain a lot of traction these companies have been buying up smaller breweries left and right. Goose Island, Lagunitas, and Wicked Weed are just a few examples of great craft beers that were bought out and are now owned buy the big guys in the space.

So what does this mean for Craft Brew Alliance Inc.? It means that good ol’ BREW stock is pretty much the only publicly traded way to get your hands on pure craft brew, and I am all for it. I just wish I would have gotten in years ago. The fact of the matter is that craft beer and cider isn’t going anywhere. People love to support local and craft beer also offers people the perfect opportunity to act a little snooty or pretend that they know a lot about beer by saying things like “oh yes this is a Belgian-inspired double ipa with added citrus” or “this is a bourbon barrel stout made in Woodford Reserve casks.”

Let’s be real though, if this company has any measure of success there is plenty of cash in the big name pockets to come buy it up. Cheers to the Craft Brew Alliance!

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