Gearing Up For Boston Beer Summer Sales

It is usually right about this time every year that I start taking another look at a favorite beer of mine, Samuel Adams, and that means The Boston Beer Company. This is one of those companies that I love to own, but prefer to trade. It just seems to consistently deliver for me in the way of gains if I buy a few months before the summer, and sell it a few months before the winter.

It's beer right? And people tend to drink more beer in the summer. Stands to reason? I think so, and the results of making this trade year after year so far has at least confirmed my theory on this.

Not to mention the fact that The Boston Beer Company is also a consistent solid performer, and every year I open a new position in the company, it costs me more upfront. There is also some appeal, I think, to the fact that Jim Koch loves beer, and is passionate about his business. The result is a solid revenue base, solid growth in the business, and when you have that personal touch added in—this tends to go hand in hand with solid performance.

The Boston Beer Company also happens to be, technically, the last big American brewery since Miller, Coors, and Anheuser-Busch were all bought by foreign beer companies.

I'll be watching the stock price over the coming weeks, and will begin to open my position. I'll also be watching the put options (which I prefer to sell) to make some money on that end of things as well.

With the put options I always take a look at where I think the stock price will go, and will set my strike price well enough below that so that I can essentially keep the premium paid to me, and not have to actually buy the stock. A process that I can repeat a few times while my interest is piqued in the stock and reap additional rewards.

I also happen to like the fact that a few of my summer six packs will be bought and paid for just by owning the stock and selling options on it. Best of both worlds if you ask me.

Watching Cypress Semiconductor (CY)

Back on the 21st I wrote that sometimes you simply root for sideways stock movement, and what I was referring to were stock options, and in this case Cypress Semiconductor (CY) in which I sold some covered call options for with a February 20th expiration date and a strike price of $15.

What was the plan?

Sell the calls and hope for the stock to stay below $15. Then there is always the problem with Murphy's Law, in which, if it happens to be of any interest whatsoever to you, I happen to have a very intimate relationship with.

If I short a stock it goes up. If I go long a stock it goes down. And when I sell a covered call on a stock that has been in a trading range and sell the call above the trading range that I do not wish to sell, but simply wish to generate cash on, it breaks through resistance and goes higher than the strike price.

Ugh!

Not that it bothers me ultimately. I still make money on the calls I sold and I still was already in the money on the underlying stock. Still, once a stock does go in the money I like to try and generate that cash monthly.

At least for a little while anyway.

So I am watching Cypress Semiconductor and keeping my fingers crossed that a) it will drop below the $15 strike, but not go too far below the strike, and b) that in the meantime the buyer of my calls does not decide to exercise his options forcing me to sell my stock.

It is trading today so far at $15.37, which also by the way happens to be a new 52-week high.




ALSO BY SPRINGBOARD

LOADING UP ON OASIS
FORD MOTOR TO SLAM THROUGH 2015
NO RYAN IN 2016

A Smoking Stock

It happens to almost all investors, and most of the time not due to any lack of due dilligence—sometimes you just miss something. Take tobacco stocks, which despite all of the efforts of the government and other groups to shutter the doors of the "evil" tobacco companies, has been unsuccessful. The stocks have burned through all of the hurdles, and have soared.

If you owned just Altria, for example, one of the best performing of all tobacco stocks, in the last 30 years or so your investment would have grown over 15,000%, or roughly 500% a year on average. That's a return any investor could certainly be happy about since most investors are used to around 10% being a fair annual return on their money.

Hindsight is always 20/20, of course. You can't get mad when you miss something, although you can be disappointed. I am disappointed. Partly because I did own this stock at least twice earlier on and took profits early on as well. But at least I can marvel at the remarkable money that can be made from time to time through investing. There were Altrias before Altria, and there will be Altrias after Altria.

Look at IBM's heyday. Or how about Microsoft or Google? Hell, even Berkshire Hathaway.

Am I saying that Altria is a company to buy now? Certainly not. All of the indicators seem to suggest that the course has been run, and Altria has really become a value play. Some might even argue calling it that might be overly optimistic as some are predicting a decline in the tobacco industry.

The point here is that there are smoking stocks all over the place, and they have come many times in the history of the stock market. You cannot predict who will be the next big winner. But just knowing that it is possible to latch onto one, even if it just a stroke of pure luck? That makes any play in the markets interesting, and even enticing.

Unemployment Numbers May Drive Future Auto Sales

The unemployment numbers released today show some sign that just maybe we may be beginning to see a bit of a turnaround. Certainly the DOW Jones Industrial Average, and frankly all of the indices, have been on fire. The DOW has seen record highs.

This leads to one other thing we know. Auto sales have lagged both in the United States, and big time in Europe. All indicators point to a trend in the United States over the past 5-8 years that says that Americans in particular have been keeping their cars for longer periods of time.

When the economy stinks, who the heck can take the chance to buy a new car? Just drive what you have and run with it.

In fact, if you'd have invested in many of the auto parts companies like O'Reilly, for example, you'd have seen some pretty nice gains. People keeping their cars longer means they'll need parts to keep them running in tip top shape.

Which brings me back to the automakers. If and when, and I really think it is more a matter of when than if, the economy really starts to get some of its legs back, I think the very first thing the average American is going to do is replace their old car.

Sure, houses are nice, and the housing market has been having a pretty good run as well lately. But cars are still at the heart of every single American that drives. A new car is a treat. And if jobs numbers begin to improve, and people feel more secure in the jobs they have, and especially if the economy begins to provide less uncertainty as to where it's headed, Americans will park a shiny new car in their driveway.

It's a high ticket item, but it's not as high a ticket item as a house is. And the interest rates are still running relatively low, making any deal at the dealership even more enticing.

I am focusing on American automakers as well in this idea. I like Ford a lot. Mostly because Ford is the smaller of the Big Three US automakers, and because they have streamlined their business massively, and I think they have the most to gain with market share. Not to mention they are making some pretty nice cars.

Why American as well? I think there is a growing amount of interest in this country to buy American. We are beginning to see many more efforts by retailers to stock their shelves with American made goods. Walmart recently said it would add $50 billion over the next 10 years of American made goods. Big home improvement chains like Menards, which are all over the Midwest states, especially around Minnesota, Illinois, and Wisconsin, has been on a rampage stocking their stores with American made and regularly offering American made sale prices and incentives.

I just think that more Americans are becoming aware that in order to really seat this country back into a good economic situation, we are going to have to start putting factories back on line, and in turn Americans will have better employment choices in sectors of manufacturing, which historically paid good wages and benefits to the average American. The fact that you can have a good paying job without the need for a college degree is also a plus since more Americans working and making good money no matter their status means many more dollars will flow in the real economy, and ultimately into these American businesses.

Ford Motor Company is my top pick. But I think if you invest in any automaker right now, in 12-24 months, you'll see substantial gains. Maybe the dip in unemployment is just a short term fluke. Or it is something that signals a turnaround. Either way, I don't see this economic downturn as being a permanent thing, and like I said before, the very first treat when all is good will be a shiny new car.

And that's why I think the automakers are good buy right now.

Full disclosure: Jim Bauer currently has stock in the Ford Motor Company.