We recently compiled a list of the 10 Best Liquor Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where The Boston Beer Company, Inc. (NYSE:SAM) stands against the other liquor stocks.

Short selling is a strategy where traders profit from the decline in the price of a stock or other securities. It is when traders can borrow shares and sell them, hoping to purchase them back when they are cheaper. The strategy allows traders to capitalize on stocks or markets they feel are overvalued, giving them more opportunities to make a profit.

READ ALSO: 7 Best CBD Stocks to Invest In Right Now

Short sellers in America had a tough year in 2024, as the broader US market posted gains of over 23%, building on a gain of over 24% from 2023. The two-year uptick of 53% is the highest since the almost 66% rally in 1997 and 1998. As a result, short sellers were down $180.9 billion in last year’s mark-to-market losses, representing a decrease of approx. 15% on an average short interest of $1.2 trillion. The sectors where shorts performed the worst are, unsurprisingly, Information Technology and Communication Services, as tech stocks surged the most last year. However, the European market has recently been a popular playground for short sellers amid the region’s sluggish economic and earnings growth and political instability in France and Germany.

The alcohol sector also seems like an attractive option for short selling, especially after the recent advisory by the US Surgeon General Vivek Murthy that consuming alcohol increases the risk of at least seven types of cancer, including breast, colon, and liver cancer. The report claims that alcohol consumption in the US is directly linked to approximately 100,000 cancer cases and 20,000 deaths annually. As such, Mr. Murthy has proposed to put cancer warning labels on alcoholic beverages, signaling a shift toward more aggressive tobacco-style regulation for the sector if adopted. The Surgeon General also called to reassess the guidelines on alcohol consumption limits, so consumers can weigh the risks more accurately.

The advisory also managed to impact the financial market, sending down the stocks of several major alcohol players in the country, in some cases by over 3%. This comes at a time when the alcohol sector is already facing some major headwinds, including a downturn in sales following the pandemic boom, threats of looming tariffs, competition from alternative beverages, and the rapidly rising trend of abstinence. More and more Americans, especially the younger generations, are becoming increasingly conscious about health and wellness and saying ‘no’ to alcohol. According to the National Institute on Alcohol Abuse and Alcoholism, America’s per capita annual consumption of alcohol in 2022 was 2.5 gallons, down from 3.28 gallons in the early 1980s.

However, this shift has marked a new opportunity for the alcohol industry, which has responded by flooding the market with a wide range of low- and no-alcohol beverages. The strategy seems to be paying off, as according to Nielsen, non-alcoholic beer, wine, and spirits collectively surpassed $565 million in sales in 2023, up 35% from the year before.

There are also doubts over how effective putting warning labels on alcoholic beverages will be since ingrained habits are hard to change and similar labels have done little to curb smoking. Some experts remain optimistic. Paul Gilbert, an associate professor at the University of Iowa College of Public Health, believes that it is unlikely that people will immediately change their drinking habits following the Surgeon General’s report, but it could eventually lead to changes in how people perceive their risk.

Methodology:

To collect data for this article, we looked up the 20 Largest Publicly Traded Liquor Companies in the US and then picked out the ones with the lowest short percentage. The stocks are sorted in descending order of their short interest, as of December 13, 2024.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

The Boston Beer Company, Inc. (NYSE:SAM)

Short % of Shares Outstanding: 3.04%

Coming in at number 8 on our list of the Best Alcohol Stocks is The Boston Beer Company, Inc. (NYSE:SAM). One of the largest American-owned brewing companies, TBBC is best known for its line of all-malt beers under the brand name Samuel Adams.

As the craft beer market continues to suffer, The Boston Beer Company, Inc. (NYSE:SAM) is following an aggressive diversification strategy to keep up with the changing consumer trends.  A great example is the company’s launch of a distinctly American light craft lager called Samuel Adams American Light, to make sure it doesn’t miss out on the up-and-coming no-lo trend. TBBC also forayed into the rapidly ballooning THC beverages sector recently with the launch of Emerald Hour, a line of non-alcoholic ‘Cali Sober’ cannabis cocktails. The company continues to remain a dominant force also in the hard tea category and its Twisted Tea Brand enjoys a strong 85% market share, with the next best-selling competitor brand limited to a low single-digit share in the market.

As part of its continuous efforts to optimize its supply chain, The Boston Beer Company, Inc. (NYSE:SAM) announced last month that it has amended its production agreement with Rauch North America to better align with its future capacity needs. The move has cost the company a $26 million cash payment to Rauch but will help it secure increased production flexibility and more favorable termination rights. Consequently, Boston Beer has cut its full-year GAAP earnings per share guidance to $3.80-$5.80, down from $5.50-$7.50.

Despite the payoff, The Boston Beer Company, Inc. (NYSE:SAM) remains in a strong financial position. The beverage company declared in its Q3 2024 earnings call transcript that it had generated over $200 million in operating cash flow YTD and maintained a cash balance of $256 million at the end of the third quarter with no debt, a rarity among the massive global beer conglomerates. Moreover, to return value to its shareholders, TBBC has repurchased $191 million in shares this year by the end of Q3 and recently even expanded its share repurchase authorization by $400 million, bringing the total repurchase agreement to $1.6 billion.

Overall SAM ranks 8th on our list of the best alcohol stocks according to short sellers. While we acknowledge the potential for SAM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.