I'll Drink to That
|Written by GSCR Staff|
|Friday, 19 April 2013 09:18|
After a tumultuous week, we could use a drink or time at a local pub for happy hour. With that in mind, today’s featured stock is Craft Brew Alliance, Inc. (NASDAQ – BREW - $7.45). The Company brews and sells its brands Widmer Brothers, Redhook, Kona, and Omission in draft, bottles, and cans to restaurants, bars, and stores. It also operates 5 pub style restaurants.
The Kona brand, which comprised 90% of revenue in 2012, has continued its strength, steady growth and proliferation. Redhook also has a growing national presence with some excellent marketing strategies. Nothing goes together like beer and sports fans. The brew has been featured on the very popular nationally syndicated “Dan Patrick” TV and radio morning show on NBC sports network, where Redhook is used in an “On Tap” segue. The company is also launching another brand, Audible Ale sometime in 2013, which is a spin-off of Redhook.
EPS are forecast to rise 40% to $0.18 this year from $0.13 in 2012. Another great trend in BREW is an average revenue growth of 13.5% over the last three years, with another increase of over 9% to $184 million forecast this year. Next year Street estimates call for revenue of $200M and EPS of $0.27. While the stock may not appear to be cheap on a P/E basis, it is trading at a reasonable price/revenue multiple of under 1.x revenue.
There has been a barrel full of acquisition activity in the beer industry over the last few years which is one thing to keep in mind as holding onto the stock may prove a great move down the road.
Combine the growth factors and recession proof nature of the business with some bullish signals in MACD and Fibonacci analysis and we think we may have a trading winner. Can the stock approach the $10 mark in 2Q13? I’ll drink to that!
Have a great weekend!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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