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Anatomy of Success: Boston Beer Company (SAM)

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The proven Zacks Rank is great method for both beginning and experienced investors to identify the strongest stocks to buy. The model, which emphasizes earnings estimates and estimate revisions, discovers companies of all shapes and sizes that are displaying the right characteristics to beat the market.

When a stock earns the coveted Zacks Rank #1 (Strong Buy), it is poised to provide superior returns over the next one to three months. Of course, achieving this ideal rank is no easy task. Of the thousands of companies tracked by Zacks, only about 5% earn this designation.

In the story below, you will learn about one particular company that helped show the strength of the Zacks Rank. If investors had followed our ranking system when it flagged this iconic beer brand, they would have witnessed massive profits.

The Boston Beer Company (SAM - Free Report)

The Boston Beer Company is one of American’s top beer producers. The brewery sells about 60 beers under the Samuel Adams and Sam Adams brads, as well as 20 hard ciders under the Angry Orchard brand, 13 malt beverages under the Twisted Tea brand, four hard seltzers under the Truly Spiked & Sparkling brand name, and more.

This remarkable portfolio of drinks brands, which span a number of popular trends in North American alcohol, likely helped the company deliver one of its best years ever—which featured the stock being flagged by the Zacks Rank a number of times.

SAM first earned a Zacks Rank #2 (Buy) on July 14, 2017. This ranking came as analysts grew increasingly bullish on the company’s near-term earnings prospects. Boston Beer delivered on that bullishness with an incredible quarterly earnings report just two weeks later.

For that period, Boston Beer reported earnings of $2.35 per share, absolutely crushing the Zacks Consensus Estimate of $1.29 and improving more than 14% from the prior-year period. The stock would go to earn its first Zacks Rank #1 (Strong Buy) of this stretch in the coming weeks as analysts digested this incredible report and revised estimates for upcoming periods upward.

SAM would later earn another Zacks Rank #1 (Strong Buy) on Nov. 3, 2017—immediately following another better-than-expected quarterly report. By this point, the stock was already up 33% since it had earned its #2 (Buy) in July, and things were only just getting started.

This time around, Boston Beer notched EPS growth of 13% and reported profits of $2.78 per share, once again crushing the Zacks Consensus Estimate of $1.84.

Investors will also note that SAM is currently sporting a Zacks Rank #1 (Strong Buy). This is because earnings estimate revision trends remain favorable for the stock. In fact, for its soon-to-be-reported quarter, Boston Beer has seen its Zacks Consensus Estimate tick 25 cents higher in the past month.

The below chart demonstrates the price performance for SAM and 12-month forward looking EPS estimate (in red), starting from the time the stock first earned a Zacks Rank #2 (Buy). During this stretch, SAM never moved lower than a Zacks Rank #3 (Hold).

 

As we can see, SAM was a huge winner for those that followed the Zacks Rank. The stock is currently up more than 133% since earning a Zacks Rank #1 (Strong Buy) last year. Investors should know that our model is the simplest way to identify elite stocks poised to beat the market on a consistent basis.

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