The Day Ahead: Channel Your Inner Financial Bushwhacker
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Basics of a "Horror Story" Stock
- Boston Beer has publicly stated that it is "prepared to forsake earnings in the short-term" to invest. Yet, the stock trades at 25x forward earnings (beyond exorbitant multiple for a packaged food company or a consumer staple, you choose), building in a takeover rumor in the valuation that has been around for as long as I have covered the company (Qualifications #1 and #2).
- The heart of the business, Sam Adams non-seasonal brews, is experiencing waning volume (Qualification #3).
- The gross margin is being eaten by higher costs and unfavorable product mix (Qualification #3).
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