We recently compiled a list of the 10 Best Beverage Stocks to Buy According to Analysts. In this article, we are going to take a look at where The Boston Beer Company, Inc. (NYSE:SAM) stands against the other beverage stocks.
Consumer behavior plays a key role in shaping any industry, and the beverage sector is no exception. The industry is witnessing a noticeable shift in drinking habits, with Americans becoming more conscious about what they consume due to health considerations. There has been an increase in demand for low and no-alcohol beverages, and several companies are jumping on the bandwagon and producing drinks with all of the taste but those that are low on or without alcohol.
READ ALSO: 8 Best Beverage Dividend Stocks To Buy According to Hedge Funds and 50 Drunkest Counties in Every State in the US.
According to a consumer sentiment survey commissioned by NCSolutions (NCS) in early 2024, around 61% of Generation Z intended to cut down on alcohol consumption, representing a 53% year-over-year increase in the share of respondents who said they planned on drinking less alcohol. A little over one-third of the demographic cohort participants said they were interested in trying a beverage that aligns with a sober curious lifestyle.
On the other hand, 49% of millennials responded by saying they plan to reduce their alcohol consumption, an increase of 26% from the survey findings in 2023. Overall, 41% of Americans hoped to drink less in 2024, compared to 34% the year before. These results reflect the gaining popularity of the sober curious movement in the United States, driven by strong interest from the younger generation.
According to Fortune Business Insights, the non-alcoholic beverages market size in the United States was valued at $161 billion in 2023. It is projected to increase to nearly $226 billion by 2030, at a CAGR of 4.91%. The rising popularity of refreshment drinks and mocktails, coupled with innovative marketing and branding strategies of beverage manufacturers are propelling growth in the non-alcoholic beverage market.
Despite consumer behavior shifts within the beverage industry, the overall outlook for the sector is promising. According to a report by Research and Markets, its market size is expected to reach $2.29 trillion by 2030. The industry continues to see robust demand amid rising disposable incomes globally and rapid expansion in developing economies.
However, Trump’s announcement of a 25% tariff on all imported steel and aluminum is a looming threat to the American beverage industry, as about 75% of all new beverage launches in North America now appear in aluminum cans. The tariffs are expected to increase input costs and lead to a rise in prices for end consumers, which could adversely impact struggling categories in the beverage industry.
Methodology
For this article, we sifted through screeners to identify stocks in the beverage industry that had an average share price upside potential of 20% or higher as of the close of day on February 20, 2025. Then we listed the top 10 stocks in ascending order of their average share price upside potential. We have only considered stocks that had at least three analyst ratings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A closeup shot of a beer tap pouring a golden lager.
The Boston Beer Company, Inc. (NYSE:SAM)
Average Share Price Upside Potential as of February 20: 33.74%
The Boston Beer Company, Inc. (NYSE:SAM) sells alcoholic beverages across the United States and selected international markets. The company offers beers, flavored malt beverages, hard cider, hard seltzer, and hard tea. It is one of the best beverage stocks to buy according to analysts, with an average share price upside potential of over 33%.
The company is following an aggressive diversification strategy amid changing consumer preferences. Last year, it launched Samuel Adams American Light, a refreshing light craft lager for everyday drinking occasions. The beverage has an ABV of 4.2% and is designed to be an easy-drinking beer without compromising on flavor.
The Boston Beer Company, Inc. (NYSE:SAM) has also forayed into cannabis beverages. It recently unveiled Emerald Hour, a line of non-alcoholic cannabis cocktails. The drink will begin with two cocktail styles: Cranberry-Citrus and Ginger-Lime. Emerald Hour, which is made with cannabis extracts and cocktail ingredients offers a great alternative for consumers looking for a stronger and booze-free happy hour.
The company is also optimizing its supply chain. As part of these efforts, on December 20, The Boston Beer Company, Inc. (NYSE:SAM) amended its production agreement with Rauch North America Inc. to better align its future capacity requirements. While the move is expected to cost $26 million in pre-tax contract settlement expenses and impact diluted EPS for Q4 FY24, it will help in increasing production facility and secure more favorable termination rights.
According to Insider Monkey’s database for Q4 2024, 29 hedge funds held a stake in The Boston Beer Company, Inc. (NYSE:SAM), up from 28 at the end of the third quarter. Savoir Faire Capital Management was the largest investor in the company, with holdings valued at approximately $4.2 million, as of December 31, 2024.
Overall SAM ranks 6th on our list of the best beverage stocks to buy according to analysts. While we acknowledge the potential of SAM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
