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Here's Why Boston Beer (SAM) Will Retain Bullish Run in 2020

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The Boston Beer Company, Inc. (SAM - Free Report) seems well positioned to sustain its ongoing momentum in the New Year, courtesy of its growth efforts and sound fundamentals. Notably, shares of this Zacks Rank #1 (Strong Buy) company have gained 5% in the past three months, outperforming the Consumer Staples sector's growth of 0.2%. Meanwhile, the industry has seen a decline of 9%. Further, investors can’t ignore the stock’s Growth Score of A, which is a testament to its sound fundamentals.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Endeavors for Sustained Growth

Boston Beer is on track to capture the growing popularity of hard seltzers, particularly the Truly brand, among consumers.  In the third quarter, the company launched Truly Draft nationally and continued to expand package distribution across all channels. Additionally, it is launching new formulations for all Truly flavors to make this brand the best-tasting hard seltzer in the market.

In early 2020, it plans to launch the Truly Hard Seltzer Lemonade in both a variety 12-pack and single-serve sizes. The company also expects to roll out another new flavor, Watermelon Kiwi, which will be available in Truly Tropical Variety Pack and 6-packs. With these new flavors, the National Hockey League (NHL) partnership and the new ad campaign, we believe the company will boost its position as a leader in the hard seltzer category while making Truly a core brand. 

Keeping in these lines, the company’s recent multiyear U.S. partnership with NHL will help boost Truly and other brands, including Samuel Adams and Dogfish Head. 

Speaking of the Samuel Adams brand, Boston Beer is on track to revive its most popular brand via packaging, innovation, promotion and brand communication initiatives. This is part of its turnaround efforts to bring Samuel Brand back on the growth trajectory.  

Further, Boston Beer, which shares space with Molson Coors (TAP - Free Report) , Constellation Brands (STZ - Free Report) and Anheuser-Busch (BUD - Free Report) , is keen on retaining Angry Orchard and Twisted Tea’s momentum while ensuring Truly Spiked & Sparkling's leadership position in the hard sparkling-water category. Also, the company focuses on accelerating cost savings and efficiency projects, with savings directed toward brand development.

The company is poised to see shipment growth by managing inventory levels in the wake of increased customer demand. Moreover, major innovation, quality of products and strong brands alongside solid sales execution and support from distributors have been aiding depletion. Additionally, increases in Truly Hard Seltzer and Twisted Tea brands, as well as the inclusion of Dogfish Head brands, are contributing to depletion growth, which is likely to continue in 2020.  Driven by the solid trends witnessed so far, management raised the lower end of shipments and depletions view for 2019. For 2019, Boston Beer now estimates shipment and depletion growth of 19-22% compared with 17-22% mentioned earlier. Also, management expects the strong depletions and shipments trend to continue in fiscal 2020, evident from its growth projection between high teens and low twenties.

Bottom Line

Given such solid strategies on board, we believe the company will keep its stellar show on. In fact, the Zacks Consensus Estimate for the company’s earnings has been revised 1.9% and 9.4% upward, over the past 60 days, for 2019 and 2020, respectively. 

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