Craft Brew Alliance (BREW)
This is really the very same argument I made last week when I said that Anheuser-Busch InBev (BUD) was a sell. Cheapo beer (can you think of a better name for it?) comes in aluminum cans and tastes like standing water. Craft beer comes in bottles and tastes like beer. Due to the higher price of aluminum because of the recently announced 10% tariff on aluminum, cheapo beer may soon be more expensive. (Nearly all aluminum will be charged under the tariff in its current form; see the Aluminum Association’s argument here.) It follows that some consumers will be pushed to trying craft beer, and no one stands to benefit more from that than the Craft Brew Alliance, which includes Redhook Ale Brewery, Widmer Brothers Brewery, and Kona Brewing company. The company is worth $359 million and only recently became profitable. f it can raise its profit margin further, BREW shares are likely to do very well indeed.
True, Corona, which is basically a cheapo beer, also comes in bottles, but I’ve reiterated my bullish position on that stock recently enough.
Chart courtesy of www.stockcharts.com