Amazon.com Inc. (NASDAQ: AMZN) Started as Neutral at Nomura.
Applied Materials Inc. (NASDAQ: AMAT) Started as Neutral with $13 target at Credit Suisse.
Boston Beer Company (NYSE: SAM) named Momentum stock of the day at Zacks.
Cameron International (NYSE: CAM) Reiterated Buy with $73 target at BofA/ML.
Chimera Investment Corporation (NYSE: CIM) Raised to Neutral at Stern Agee.
Genworth Financial Inc. (NYSE: GNW) Raised to Neutral at Citigroup.
Magnum Hunter Resources (NYSE: MHR) reiterated Buy and raised target to $8.00 at Canaccord Genuity.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) maintained Neutral but cut target to $14 at JPMorgan.
NVIDIA Corporation (NASDAQ: NVDA) Reiterated Buy with $18 target at BofA/ML.
Parker Drilling Company (NYSE: PKD) named value stock of the day at Zacks.
Plexus Corporation (NASDAQ: PLXS) named Bear of the Day at Zacks.
Regions Financial Corporation (NYSE: RF) Started as Outperform at BMO Capital.
SUPERVALU Inc. (NYSE: SVU) Reinstated as Neutral at BofA/ML.
United Therapeutics (NASDAQ: UTHR) Raised to Outperform as Bull of the Day as Zacks.
Zimmer Holdings Inc. (NYSE: ZMH) Cut to Hold at Argus.

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JON C. OGG

The acquisition should also give a boost to Altria Group Inc. (NYSE: MO), which owns a 27.1% stake in SABMiller from Altria’s sale of Miller Brewing to SAB in 2002. Molson-Coors Brewing Co. (NYSE: TAP) and Boston Beer Co. Inc. (NYSE: SAM) are both much smaller than either InBev or SABMiller, and could be additional targets for the Big Two as the beer business continues to consolidate.

SABMiller derives about 80% of its revenue from emerging markets, with China’s Snow brand the largest seller in the world and China the biggest consuming nation in the world. US consumption was about half that, but still the second-largest beer consumer.

Chinese beer drinkers downed nearly 12 billion gallons of brew last year, topping the world beer rankings. InBev’s Bud Light and Budweiser and Brazilian brew Skol followed.

But the outlook for beer in emerging markets is getting softer, and SABMiller wanted to make an acquisition in a developed market, and Foster’s is the largest brewer in Australia. Foster’s also has a significant presence in Asia, so SABMiller gets to increase its footprint on two continents.

US beer consumption is growing in the craft beer and high-priced beer segments, and imported beers have also seen increases. Import sales remain about -11% below pre-2008 levels. Overall, though, there are some big losers in beer sales.

Beer industry growth has been increasing since the very slow days of 2009, when growth was a meager 0.4%. In 2010 that figure grew to 1.6%, and is expected to reach 2.5% this year. Europe and the US contribute about 1% growth each, and the emerging nations of Asia, Africa, and the Middle East contribute up to 5% of the growth.

Brewers also got a break this year on barley prices. The cold wet spring in North America and some of Europe delayed corn planting long enough that some farmers planted barley because prices at the time were over $350/metric ton and expected to rise. But the strong crop yields have pushed barley prices down below $250/metric ton in Canada, one of the largest barley growing regions in the world.

Foster’s fought off a $9.2 billion offer from SABMiller earlier this year, and the company’s patience paid off to the tune of about $1 billion. The deal looks like a winner for both sides.

Paul Ausick

Analysts at Citigroup have raised both Potash Corp. of Saskatchewan (NYSE: POT) and Mosaic Co. (NYSE: MOS) from ‘hold’ to ‘buy’. Citi also raised Mosaic’s price target from $84/share to $85, and raised its price target on shares of Agrium Inc. (NYSE: AGU) from $94/share to $96, while maintaining a ‘hold’ rating on the shares. Fertilizer makers have gained anywhere from about 40% to more than 120% in the past 12 months.

CF Industries Holdings, Inc. (NYSE: CF) is the big gainer and the stock is trading off slightly today, at $153.03, down about -1.4% in a 52-week range of $57.56-$158.42. CF gained more than 12% just last week. Monsanto Co. (NYSE: MON), which has posted a 40% share price gain in the past year, and Syngenta AG (NYSE: SYT), up about 50% in the same period, are just following along.

There’s no big mystery about what’s going on. Demand for food is up and perhaps the cheapest way to grow more food is to add more fertilizer. It beats clearing new land (if that’s even possible).

A dry year so far has boosted prices for malting barley in Europe. Prices have jumped from about $300/metric ton in November 2010 to around $380/metric ton in May.

The long delays in corn planting in some parts of the US could lead farmers to plant barley, a crop that can thrive with a shorter growing season. The drought in Europe has hit the barley crop very hard, and the number of US acres already set for planting is just 2.95 million acres, the second lowest total on record. Canada’s recently boosted its barley price to about $360/metric ton.

Rising prices for barley are not the only thing hurting brewers — demand is falling as well. Anheuser-Busch InBev SA (NYSE: BUD), Molson Coors Brewing Co. (NYSE: TAP), and Boston Beer Co., Inc. (NYSE: SAM) are all feeling the effects of lower sales, and the coming rise in barley prices won’t help. Anheuser-Busch InBev is trading up about 3% today, at $60.32, in a 52-week range of $46.19-$60.38. Molson Coors is trading down fractionally at $46.59, in a 52-week range of $40.35-$51.11. Boston Beer is down about -0.5%, at $82.97, in a 52-week range of $60.95-$100.93.

Finally today, Russia announced over the weekend that it would resume wheat exports in July. The country could export up to 20 million metric tons of wheat out of a crop that could be as high as 85-90 million metric tons. The news has hit European markets hard and US wheat futures in Chicago are down more than -5%, at about $7.78/bushel.

The PowerShares DB Agriculture Fund (NYSE: DBA) is off about -0.4%, at $32.70, in a 52-week range of $22.85-$35.58. The Market Vectors Agribusiness ETF (NYSE: MOO) is up nearly 1%, to $55.22, within a 52-week range of $35.62-$57.93.

Paul Ausick

Allied Irish Banks plc (NYSE: AIB) is up 2% at $2.98 and the Bank of Ireland (NYSE: IRE) is up 2.5% at $2.00.

The New Ireland Fund, Inc. (NYSE: IRL) closed at $6.99 on Wednesday and we have yet to see formal trading indications in the pre-market.

Ryanair Holdings plc (NASDAQ: RYAAY) is up 2.9% at $27.37.

Elan Corp. PLC (NYSE: ELN) is up 1.6% at $6.33.  Warner Chilcott plc (NASDAQ: WCRX) has yet to show formal trading indications in the pre-market trading.

Boston Beer Co. Inc. (NYSE: SAM) and Molson Coors Brewing Company (NYSE: TAP) are both Irish for a day… shares have not traded pre-market but are indicated higher.  Anheuser-Busch InBev (NYSE: BUD) is up 2.15% at $55.07 in pre-market trading.

Altria Group Inc. (NYSE: MO) is up 1.2% at $24.59.  If people are drinking more today, chances are that they are smoking more and probably bringing in a few non-smokers as well.  It’s just a day thing!

Happy St. Patrick’s Day!

JON C. OGG

As the debate continues over whether or not there is going to be higher inflation, for beer it boils down to the ingredients and the costs associated with them. Beer drinkers have become part-time economists.  Beer prices have risen recently whether inflation has returned or not and whether the economy is recovering or it isn’t.

The contributors to higher beer price for last year were in Russia and Europe. The fires in Russia destroyed much of the wheat and causing an export ban This combined with the poor crops in Europe which added to the cost pressures.  These problems were compounded by the issue of higher VATs and duties that have to be passed on by the pubs and retailers to the public.

An article last year from The Telegraph described how beer prices were likely to rise in 2010 and again in 2011 in the UK.  The fear was that the price of a pint might rise more than 40%.  The cost of beer appears to be about 10% higher in England already this year.

America is not immune, particularly at the smaller brewers and at the micro-brew level even though the hops and barley are almost entirely domestic.

Budweiser from Anheuser-Busch InBev (NYSE: BUD) actually uses rice as one of its primary ingredients, which should insulate Joe Six-pack from paying too much more in America. The problem is that AB InBev and Molson Coors Brewing (NYSE: TAP) raised prices last year and had planned on raising them further this year.  The economic recovery has reached the point that many feel higher prices will finally be able to be passed on to the retail level now.

The beer giants have already started a move into the fast-growing craft brewer business by acquiring several to protect market share. A consolidation of popular brands rarely leads to lower prices for the public.  So what happens when smaller brewers have to compete for materials?  It results in generally higher prices for the public.

The decision for some brewers will boil down to whether they will favor margins over market share.  Is it more important for Budweiser to lose a point of market share or to grow margin by 3 points?

BeerAdvocate outlined the 2009 trends a year ago which showed that small and independent craft brewers saw sales dollars increase just over 10% on volume increases of more than 7%.  The 2010 figures will be released shortly. Our bet is that the independents have experienced yet another gain in both revenue dollars and in case volumes.  Craft brewers do not compete on price as used to be the case.  Now it is about “premium product at premium prices” and a six-pack cost $7.99 or $8.99 is becoming the norm, if it doesn’t have Coors or Budweiser on the label. If it is an import or a specialty brew, that price might even be higher.

Can we think of something from Meredith Whitney of late?  Yep, municipal bankruptcy woes ahead.  We don’t subscribe to her exact logic, but many do.  What is a the by-product as those municipalities are at risk? Higher taxes.  Illinois just managed to raise state income taxes from roughly 3% to 5% on a rounded basis. Nothing prevents states, cities, and counties from passing another tax on six-packs of beer?  Taxes on beer might have a different effect than higher wheat, barley and hops prices. If so, it can act as a counter to the old belief that inflation is caused largely by higher taxes.  Don’t think that higher taxes get absorbed indefinitely by consumers.  The most recent data from the U.K. in a report from the Daily Mirror showed that beer prices have fallen significantly, in part due to much higher taxes.

The recent 2011 price trends seem to offer the U.S. at least some insulation, but that is not true for Europe and the United Kingdom.  Reuters noted that Anheuser-Busch InBev (NYSE: BUD) and SABMiller are probably better protected from commodity prices as they have large breweries in the southern hemisphere where a large portion the company’s barley comes from southern nations.  Argentina’s harvests have been less affected by adverse weather than those in Europe.  Euro-brewers like Heineken and Carlsberg get most of the supplies of barley locally in the European markets.

Boston Beer Co. Inc. (NYSE: SAM) has held up well considering the trends.  In less than two years, its shares are up a staggering 350%.  Sam’s revenues grew during the recession, from $341 million in 2007 to $398 million in 2008 to $415 million in 2009.  The 2010 expected revenues are $468+ million followed by expectations of $516+ million in 2011.

There is a problem if you go back in history just a few years and examines the period of the oil bubble.  There was pressure on prices of beer in 2008 due to high transportation costs, with only a brief lull in 2009 due to the recession.  Prices never really came down much, and then prices rose in 2010 and now are set to likely rise in 2011 as well.

The chart below will shows what has happened with the price of Wheat.  Prices rose in the summer of 2010 and haven’t come back down much other than a small pullback in the fall.  For 2011, let’s just hope we don’t have traders get into a situation where traders compare wheat to the parabolic 2010 move in cotton prices.  Unlikely, but possible.

Higher beer prices seem likely.  Again.

JON C. OGG

It has been hard for US investors to invest in the beer market.  Molson Coors Brewing Company (NYSE: TAP) was the largest, and despite its Denver HQ many are under the impression that they are investing in the Canadian Molson beer company since Coors and Molson merged.  Besides that for US-beer plays, investors have only had Boston Beer Co. Inc. (NYSE: SAM) with a small $550 million market cap and the micro-cap stock Craft Brewers Alliance Inc.   (NASDAQ: HOOK) to invest in with its $57 million market cap.

Following the Peter Lynch mantra, investors can once again invest in the company of a brand they regularly use.

JON C. OGG
September 11, 2009

• Accuray (ARAY) Raised to Buy at Piper Jaffray.
• AstraZeneca (AZN) Raised to Buy at Deutsche Bank.
• Boston Beer (SAM) Raised to Neutral from Sell at Goldman Sachs.
• Boston Scientific (BSX) Raised to Outperform at Wachovia.
• CONSOL Energy (CNX) Raised to Buy at Citigroup.
• Martin Marietta (MLM) Raised to Neutral at UBS.
• Teradyne (TER) Raised to Buy at Goldman Sachs.
• Time Warner (TWX) Started as Buy at Collins Stewart.

Jon C. Ogg
January 30, 2009

• Boston Beer Co. (NYSE: SAM) cut to Neutral at HSBC Securities.
• Clearwire (NASDAQ: CLWR) cut to Sell at Citigroup.
• Einstein Noah (NASDAQ: BAGL) raised to Buy at Piper Jaffray.
• Jefferies Group (NYSE: JEF) cut to Neutral at Wachovia.
• Macrovision (NASDAQ: MVSN) cut to Hold at Deutsche Bank.
• Neustar (NYSE: NSR) cut to Neutral at Credit Suisse.
• Orbitz (NYSE: OWW) cut to Neutral at Piper Jaffray.
• Tenaris (NYSE: TS) cut to Hold at Citigroup.
• Wachovia (NYSE: WB) raised to Neutral at Credit Suisse.
• YRC Worldwide (NASDAQ: YRCW) cut to Sell at Stifel Nicolaus.

Jon C. Ogg
May 8, 2008