Boston Beer Co Inc (SAM), Anheuser-Busch InBev NV (ADR) (BUD): Is the Beer Industry Frothy or Flat?

Another global balancing act

Heineken (ADR) (NASDAQOTH: HEINY) is best know for its Heineken and Amstel brands, but it also markets cider and soft drink products. The company’s first- quarter results showed a net profit increase year-over-year from 166 million euros to 227 million euros. Revenue grew 8.1%, but if we take the revenue effect of recent acquisitions, such as Asia Pacific Breweries out of the results, revenue was actually down 2.7% compared to 2012’s first quarter. This company’s global strategy is to take advantage of opportunities in emerging economies to offset slower growth in the developed nations.

Which stock to stock up on this summer — Heiny, Bud or Sam

When you list their ticker symbols together, it does sound like three drinking buddies at a bowling alley enjoying a few brewskis. To me, the most interesting company is Boston Beer Co Inc (NYSE:SAM) and its Samuel Adams brand. The popularity of craft brews is driven by taste — consumers seem to want more variety and taste in their beverages and are willing to spend more. The question is whether competitive pressures in the beer segment will slow its growth despite its cider and malt beverage products’ increased popularity.

The stock price is very near its 52 week high of $174. Heineken trades in the middle of its range, around $32, as does Anheuser-Busch InBev NV (ADR) (NYSE:BUD), which is trading at around $87 right now. Because of brand strength and distribution breadth, my favorite of the three is good old reliable Bud. Its combination with the huge Mexican brewer makes perfect strategic sense.

If you consider these beer companies, please invest responsibly. We all know it can be intoxicating to discover an undervalued stock. I’ve learned from painful experience that over-indulging in any one stock can lead to painful regret soon after, accompanied by a nauseated feeling of “Why did I buy so many shares of this?” It’s as though you temporarily lose your investing inhibitions. Fortunately, this type of portfolio hangover usually lifts as soon as you diversify a bit more. And you promise yourself: “I’ll never take that risk again.”

Brian Hill has no position in any stocks mentioned. The Motley Fool recommends Boston Beer. The Motley Fool owns shares of Boston Beer.

The article Is the Beer Industry Frothy or Flat? originally appeared on Fool.com and is written by Brian Hill.

Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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