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Stock Watch: Boston’s Biggest Brands

A huge welcome to all the newest Eagles and everyone coming back to campus!  As an out-of-towner coming to Boston from my hometown of Pittsburgh, there was a lot I had to learn about the city.  For instance, if they invite you over to get a frappe, they don’t mean Frappuccino as I initially believed.  Boston is a strong city filled with people who love their sports, history, and definitely their Dunkin.  In light of this, here are two stock analyses on companies that Boston has made famous:

Dunkin’ Donuts (DNKN):

If you take a drive through the great city of Boston, you are almost guaranteed to see a Dunkin’ Donuts on Dunkin-Donuts-in-Boston-remain-open-during-lockdownevery block.  Although they are everywhere in Boston, there is still room for massive expansion west of the Mississippi and into the Southeast.  This expansion had distinct competitive advantages of brand recognition and the capital that a larger supplier offers.  They already have shown success in international expansion, becoming the fourth largest food chain outside of the US.  This, along with the diversification that they get from owning Baskin Robbins (a popular ice cream chain), gives Dunkin’ the stability and growth possibilities that investors love to see.  There is some concern that the P/E (price to earnings ratio) is at a high 37, but the possibility for growth combined with the diversification protection allows for the bulls to run on this stock.

Recommendation: Buy the dip around the current price of 43

Boston Beer Co. (SAM): 

samuel-adamsAlthough half of the BC community will not be able to (legally) enjoy our next stock, they may be able to share in the yield if they play the stock right.  While some of the other breweries have been flat lately, the bulls have been running with SAM being up 110% in the last year.  The story here is a growth one.  Sam Adams has a wide variety of products that fit into each season, giving it the stability that other companies in the industry may not have.  The name has been expanding and still has room to grow as they increase their expenses on advertising.  There are some concerns with a P/E of 44 and 30% of the float being sold short (meaning that people are betting against the stock).  There are concerns about how fast the expansion has come, but I don’t see a reason to call this the peak of the market when there is still growth to be had and market share to be taken.

Recommendation: Buy on a pullback between 180-190


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