When I heard that the CEO of Miller Brewing Co. said Thursday he sees a trend of consumers buying cheaper beers, I was wondering whether consumers might also be switching not just from more expensive beers to cheaper ones, but from more expensive alcoholic drinks to beer, which tends to be cheaper.
Unfortunately for Miller, for which its parent SABMiller PLC reported earnings Thursday, so far the increase in sales of more economic beers has been at the expense of the more expensive ones. So my theory isn't much of one after all. I guess that food and gas still have a higher priority than beer, and we all know how much the price of these have risen lately.
Stifel Nicolaus lowered its rating on BUD to Hold from Buy on valuation.
BUD call option volume of 23,897 contracts compares to put volume of 3,558 contracts. BUD June option implied volatility of 35 is above its 26-week average of 25 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Stock futures indicated a higher start earlier this morning following solid results from internet bellwether Yahoo late Tuesday. As earnings reports have started coming out this morning, though, stock futures have started to reverse direction.
Other than many earnings reports on tap today, investors may look at U.S. oil inventories when out later today after reaching nearly $120 a barrel (10 cents shy) Tuesday. Analysts expect supplies declined in the past week. So far oil has moved somewhat lower today, but remained near $118 a barrel.
U.S. stocks tumbled Tuesday following some disappointing results from several tech and consumer stocks. The Dow industrials dropped 104 points, or 0.82%, the S&P 500 fell 12 points, or 0.88%, and the Nasdaq Composite lost 31 points, or 1.29%.
Despite many upcoming earnings reports, investors will likely continue to focus on Yahoo! (NASDAQ: YHOO), which has reported strong results, beating analyst estimates on both the top line and bottom line. Still, the results weren't phenomenal, or uncovered any surprising issue that might show it could fare better on its own. Yahoo! has until Saturday to accept Microsoft (NASDAQ: MSFT)'s takeover offer of $31 a share or face a proxy fight. Microsoft has already said it wouldn't raise its offer, but of course, nothing is certain at the moment. YHOO shares are down about 0.8% in premarket trading.
The Boston Beer Company (NYSE: SAM) is America's largest microbrewer, producing more than twenty seasonal and year-round varieties of Samuel Adams brand craft-brewed beers at facilities in Cincinnati and Boston. The company moved to boost its capacity last summer, with the purchase of a Pennsylvania brewery from Diageo (NYSE: DEO). The new facility is expected to begin producing Samuel Adams beers in the third or fourth quarter of 2008. The company also makes and distributes Twisted Tea brand malt beverages and HardCore brand ciders. Products are distributed to retailers in the US, Canada, the Caribbean, Europe and the Pacific Rim. Anheuser-Busch (NYSE: BUD) is a major competitor.
The firm pleased investors last week, when it reported Q4 EPS of 46 cents and revenues of $92.2 million. Analysts had been looking for 35 cents and $88.9 million. Management also guided FY08 EPS to $1.70-$2.00, versus Street consensus of ($1.68).
Back in August, I wrote about the 23 state attorneys general that were taking a look at alcoholic energy drinks, concerned that consumers weren't being warned about the dangers of mixing caffeine with beer. Studies have shown that caffeine can lead intoxicated individuals to believe that they are well enough to drive, and can also mask some of the symptoms, fooling those around them as well.
Now Anheuser-Busch (NYSE: BUD) has received subpoenas from New York, Maine, Maryland, Arizona, and Iowa while SABMiller Plc. has received subpoenas for documents from Illinois, New York, Iowa, Maine, and Maryland.
In one of the more idiotic defenses I've seen in awhile, Anheuser-Busch released a statement saying that "If the Attorneys General truly believe that, despite the state and federal regulatory approvals, alcohol and caffeine should not be mixed, then they should use their powers to persuade these authorities to regulate or ban all such beverages, not just the lower-alcohol, prepackaged ones,"
What? Isn't that kind of like saying that the police shouldn't crack down on people selling crystal meth because you can buy all the products you need at the grocery store? Not that I would know ... but if Anheuser-Busch is marketing a product that contains a chemical combination that is more dangerous than the sum of the parts and consumers aren't aware of that, it's worth investigating.
Recession Stocks These companies are doing well despite the (possible) recession and are poised to cope with further weakness. Recession Stocks - Forbes.com
When I first saw the story in The Wall Street Journal(subscription required) that Anheuser-Busch Cos. (NYSE: BUD) planned to sell lime-flavored Bud Light, I thought the king of beers had gotten a little soft in the head. Then I feared for the country when I learned that rival SABMiller Plc. (LON: SAB) is gaining sales with a revolting-sounding beverage called Miller Chill which the Journal described as a "lime-and-salt-flavored light lager modeled after Mexican concoctions know as micheladas."
It seems that at some point in the 1980s or 1990s, people no longer drank beer just because they were thirsty. Instead, they needed to make a lifestyle choice. Smart, sophisticated people needed to show how cool they were by drinking overpriced imports or microbrews. I was not immune to the marketing of the time and wound up drinking a few brews with limes wedged into them until I learned better.
Former advertising executive John Greening, who did work for Anheuser-Busch, raised a more serious issue, pointing out, "their hot hand has always been Bud Light. This takes the attention away from the hot hand."
After hitting a one-year high of $55.19 in June, the stock hit a one-year low of $46.09 last week. BUD opened this morning at $47.04. So far today the stock has hit a low of $47.00 and a high of $47.59. As of 10:30, BUD is trading at $47.45, up 58 cents (1.2%). The chart for BUD looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $45 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just six weeks as long as BUD is above $45 at April expiration. BUD would have to fall by more than 4% before we would start to lose money.
BUD hasn't been below $45 at all in the past year and has shown support around $47 recently. This trade could be risky if the stock breaks below the support it has found over the past few weeks above $45, but even if that happens, this position could be protected by the defensive nature of BUD and the fact that people will move into this stock in times of uncertainty.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in BUD.
Budweiser's Dog & Pony Show Tops USA Today Super Bowl Ad Meter The Patriots' streak was broken, but Anheuser-Busch's was not. In the high-stakes world of Super Bowl advertising, it aired the best-liked Super Bowl ad for a record 10th-consecutive year. On the other end of the spectrum, Dorito's online video ad was rated worst. Budweiser's dog and pony show takes top Ad Meter spot - USATODAY.com Chart: See How All Super Bowl Ads Rated
The Cost of Not Maintaining Your Car Delaying car repairs can cost you hundreds -- or even thousands -- of dollars over the long run. Here are six areas of maintenance you should never skip. True cost of not maintaining your car - Bankrate.com
Most People Facing Mortgage Trouble Don't Know There Is Help Available With a record number of new foreclosures hitting neighborhoods across the country, a surprising 58% of delinquent homeowners don't know their lenders may offer ways to help them keep their homes, and 56% don't know that free counseling exists to help them. Homeowners late on loans often don't seek help - USATODAY.com
Billion-Dollar Losers After a bleak month for the stock market even the richest and savviest of top U.S. executives have been wounded by the market's gyrations. Capital IQ estimates that since October, five CEOs have lost more than $1 billion through holdings of their companies' stock. They include Larry Ellison, Michael Dell, Micky Arlson, Jeff Bezos and Rupert Murdoch. And that is just the start. The Billion-Dollar Losers
5 Old Tax Laws, New Amounts These five adjustments to existing tax laws also could affect your tax bill. Make sure you know the changes. Old tax laws, new amounts - Bankrate.com
Some Retailers Tighten Return Policies 40% of retailers say they have tightened the rules covering what merchandise they'll take back, and under which conditions. Keep that in mind if you're still dithering about whether to keep that hot pink sweater or iPod you got as a gift. Time might be running out to get an exchange, much less a refund. Not So Happy Returns - USA Today
Auto Makers Offering Deals Based on Brand Loyalty Faced with increasing competition in a shrinking market, auto makers are now offering so-called loyalty and conquest discounts. These deals are designed to reward car owners for either sticking with a particular brand or defecting from a competitor's (hence the word "conquest"). Auto Makers Offering Deals Based on Brand Loyalty | SmartMoney.com
Is Now the Time to Buy HDTV? With the federally mandated switch from analog to digital TV only a year away, now may be the time to buy. Is now the time to buy HDTV?
According to people familiar with the matter, the Wall Street Journal reported that Anheuser-Busch Companies Inc (NYSE: BUD) and InBev may be one possible coupling in the fast-consolidating brewery industry; the people familiar said the two have already held talks.
HSBC Holdings Plc (NYSE: HBC) yesterday launched its first two retail branches in Japan, according to the Financial Times. The bank also kicked off its "HSBC Premier" services, which aim to tap into Japan's budding market for wealth management.
OTHER PAPERS:
Despite rumors that none of those interested in struggling bank Northern Rock Plc (OTC: NHRKF), the UK Guardian reported that Sir Richard Branson will submit a bid by Monday's government deadline. Investment group Olivant is also expected to submit a bid for Northern Rock.
WEB SITES:
TechCrunch has "gotten word" that Yahoo Inc (NASDAQ: YHOO) will acquire Maven Networks for $150M.
Mattel announced that its fourth-quarter profit rose 15% despite the negative publicity over recalls of millions of Chinese-made toys. Tax gains and strong international sales of Hot Wheels and other toys helped offset the cost of the recalls.
Net income grew to $328.5 million, or 89 cents per share, in the period ending in December, from $286.4 million, or 75 cents per share, in the same quarter of the previous year. Revenue rose 4%, to $2.19 billion, from the year-ago period. Analysts surveyed by Thomson Financial had expected earnings per share of 73 cents on revenue of $2.13 billion.
For 2007, Mattel posted a profit of $600 million, or $1.54 per share, compared with a profit of $592.9 million, or $1.53 per share in 2006. Net sales totaled $5.97 billion in 2007, up 6% from $5.65 billion in 2006
On Thursday, Mattel shares rose 10.9% to close at $21.01. That's up from the 52-week low of $16.42 a couple of weeks ago.
TheStreet.com's Jim Cramer tells you he wants to own companies that make stuff that gets bought no matter what and that don't have outrageous raw costs.
We are holding by the strikes, so typical of expiration week. You get a floor on Intel (NASDAQ: INTC) (Cramer's Take) for certain, maybe catch a bounce. Obviously, people listened to Intel last night when it said PCs weren't a problem, but it traded at $42 last night and I fear that it could trade lower and would be trading lower if it weren't for the $45 tug.
Here's what I am watching, though: Coke (NYSE: KO) (Cramer's Take), MO (NYSE: MO) (Cramer's Take) and the Drug Index, the DRG. As soon as everyone knows we are in a recession, then these will be bought again. I pick those because they have the least inflationary pressures. Allergan (NYSE: AGN) (Cramer's Take) holds up and Schering-Plough's (NYSE: SGP) (Cramer's Take) trying to bottom; good signs, again.
When your information technology needs extend beyond off-the-shelf software, it's usually best to go with an experienced consultant. There is an Austin, Texas outfit that's well thought of that way. It works for some of the biggest corporations in America.
Perficient, Inc. (NASDAQ: PRFT) is an information technology consulting firm, with clients throughout the United States. Company services include software development, systems integration, consulting and support. Its specializes in solutions involving portals and collaboration, eCommerce, online customer relationship management, enterprise content management, business integration, mobile technology solutions and service-oriented architectures. Clients include Anheuser-Busch (NYSE: BUD), IBM (NYSE: IBM) and Wells Fargo (NYSE: WFC). Electronic Data Systems (NYSE: EDS) is a major competitor.
The firm pleased investors last week, when it raised its Q4 services and software revenue guidance from $56.3-$62.1 million to $61.2-62.7 million. Analysts had been expecting $59.97 million. The CEO noted that the strong revenues were bolstered by a reacceleration of organic growth. Northland Securities subsequently reiterated its "outperform" rating on the stock and declared a $25 price target.
Recession, smecession. While media worry-warts keep pondering when this 2008 U.S. recession will begin, some of those with impeccable market timing may be looking at picking up a few sin stocks for their portfolios before all this doom and gloom hits.
Fact is that recessions are an integral part of any capitalist society, and they can be beneficial to those market watchers who go against the grain when everyone else isn't looking. 30 years ago, some were wondering if capitalism could survive. Fast-forward to 2008: that's affirmative.
What can you do to survive a coming recession this year? Instead of taking all your money from stocks and stuffing it under the couch, how about picking up sin stocks? These are stocks that involve companies that make and market vices like tobacco and alcohol.
When I heard that the CEO of Miller Brewing Co. said Thursday he sees a trend of consumers buying cheaper beers, I was wondering whether consumers might also be switching not just from more expensive beers to cheaper ones, but from more expensive alcoholic drinks to beer, which tends to be cheaper.
Volatility Index S&P 500 Options
Stock futures indicated a higher start earlier this morning following solid results from internet bellwether Yahoo late Tuesday. As earnings reports have started coming out this morning, though, stock futures have started to reverse direction. 
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Something for the kids, something for the grown-ups: 
TheStreet.com's Jim Cramer tells you he wants to own companies that make stuff that gets bought no matter what and that don't have outrageous raw costs.
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
