BOSTON (TheStreet) -- U.S. stocks fell yesterday, bringing this week's decline in the S&P 500 Index to 4%, on fears of a Greek default. Meanwhile, Craft Brewers Alliance( HOOK), a collection of regional breweries including Redhook, recorded a 52-week high. The Portland, Oregon-based company's shares have tripled since the March 2009 stock-market low.

Craft Brewers, which also produces Widmer and Kona beer, has grown in popularity during the economic recovery. Despite its market value of only $85 million, Craft is the eighth-largest U.S. brewer based on domestic shipments. The company has a distribution partnership with

Anheuser-Busch InBev

(BUD) - Get Report

, which owns 36% of Craft's shares.

The beer company's other major holders are insiders. Company executives rank as the second-, third- and fifth-largest shareholders. Insider ownership is an encouraging sign as is the stock's price. Its trailing price-to-earnings ratio of 38 reflects a premium of 115% to its peer average. But a price-to-book ratio of 1.1, price-to-sales ratio of 0.7 and price-to-cash-flow ratio of 8.2 reflect discounts of 77%, 78% and 34% to respective beverage industry averages.

The craft-beer phenomenon is boiling over. Craft Brewers, unlike its bigger peers, owns three restaurant/pubs, which are adjacent to its breweries. That has helped the company maintain brand loyalty in its regional footholds of Portland; Woodinville, Wash.; and Portsmouth, N.H. American consumers' tastes are swinging toward niche brands, which offer superior flavor at reasonable prices.

The North American beer market is being attacked by companies such as Craft Brewers. Anheuser Busch, which owns Budweiser, suffered a 6.1% drop in volume during the first quarter, which management attributed to economic sluggishness. But

Boston Beer Co.

(SAM) - Get Report

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, maker of the Samuel Adams brands, enjoyed a first-quarter core shipment volume increase of 19%, signaling improved demand for its products.

The industry is being led by small-company growth. Based on internal estimates, 2009 craft-beer shipments increased 7.2%. The previous annual growth rate was 5.9%, so expansion is accelerating. According to Craft Brewers, in 2009, "the growth rate of the craft-beer segment ran counter to the activity in every other segment of the beer industry." As a percentage of total beer shipped, craft crept up from 4% in 2008 to 4.3% in 2009.

However, success breeds competition. The number of U.S. breweries is at the highest level since the end of Prohibition. Strangely, fragmentation and consolidation are concurrent trends. In order to expand market share, established players have merged with their peers. Mega-consolidations include Anheuser-Busch and InBev, and SAB's acquisition of Milwaukee, Wis.-based Miller Brewing Co.

The mergers have only produced international success. Emerging markets remain the preferred growth venue for established beverage companies. Domestic market share is flowing to smaller brewers. Craft Brewers is positioned to benefit from this trend, assuming it persists. It is also a likely acquisition target since it is one of the few publicly traded craft brewers and has already attracted millions in equity capital from Anheuser-Busch InBev.

Still, Craft Brewers has a poor liquidity position, with just $750,000 of cash and equivalents. Consequently, acquisitions don't seem like a possibility. The company carries $25 million of long-term debt. Its most attractive attribute is growth. During the past three years, Craft has increased revenue 50% annually, on average, and boosted net income 35% a year.

-- Reported by Jake Lynch in Boston.

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