Trade of the Day: SAM Stock Headed for Another Stumble

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Boston Beer Co Inc (SAM) — Shares of SAM stock fell 1.6% Friday after the maker of Sam Adams beer and one of the top craft breweries in the United States delivered a disappointing earnings report.

The company reported Q4 earnings fell 13.6% year over year to $1.21 per share, while revenue dropped 1.3% to $229.8 million. Management said it expects earnings of $7.60 to $8 per share for the full year, below the consensus estimate of $8.05.

Following the earnings announcement, S&P Capital IQ Equity Research maintained its “Hold” rating on SAM stock but lowered its price target by $48 to $179. Its analysts noted that earnings are being hurt by increased competition in the craft beer market and slowing cider sales.

At the end of December, SAM stock broke a head-and-shoulders neckline at $202, which was confirmed by high volume. After falling to about $160, shares rallied but reversed at the 50-day moving average at about $189 on twin sell signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR).

Friday’s earnings report resulted in another high-volume decline. Although SAM stock closed near its high of the day, MACD doesn’t support a further advance.

So it is reasonable to use Friday’s late rally to sell SAM stock short at $182 with a downside trading target of $146 for a potential gain of almost 20%. As with all short sales, traders should protect against the possibility of theoretically unlimited losses by entering a stop-loss order at $192. And ask your broker if there are any special restrictions on selling SAM stock short.

SAM Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/boston-beer-co-inc-sam-stock-trade-day/.

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