Opinions
Peter Imhof
Brick Brewing Company Ltd.
BRB-T
BUY ON WEAKNESS
Dec 27, 2012
$1.490
Stock price when the opinion was issued
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COMMENT
Has been very good to him. He bought it at around $.25 several years ago, when they were potentially on the verge of bankruptcy. Brought in a new CEO who had been at another brewery that got taken over. Sold out a few months ago at $3.99. It is still over $3, so it has zero interest for him.
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SELL
He paid $0.25 and sold out at $3.00. He is not going to cry about missing the recent upside. He likes the company and the CEO and likes their beer. The stock price is too high now and he would think of selling. It is weather dependant and seasonal. They started paying a dividend about two years ago.
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TOP PICK
Well-run. Lots of excess capacity with potential (he suspects they are) to be an early player in fusing cannabis with beer. BRB has lot of experience in blending drinks. Cheap valuation and good balance sheet. Potential upside in cannabis-beer. There's always the chance of a bigger player buying out the Brick. (Analysts’ price target is $4.66)
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BUY
Getting into the cannabis space? He likes and has long owned this. They have a good core brewing operation, the second-largest craft brewer in Canada. They are aggressively pursuing cannabis drinks. He thinks they will be one of the first to market cannabis drinks in Canada when it becomes legal. They have a modern facility in Cambridge, ON with lots of excess capacity. They're in a position to grow and take advantage of the cannabis space. This isn't built into the share price yet, so BRB is great value now.
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BUY ON WEAKNESS
Could Brick be a takeover candidate? He doubts it. It's a beautiful play and beautiful company. The CEO ran another company that got taken out; when this happens there's a better chance for the current company to get taken out. But he doubts that BRB will get taken out. Would a Molsons or Coors get rid of some of their competition this way. BRB's revenues will probably be north of $50 milllion this year; revenues last quarter went up nicely. They're looking to get into cannabis beverages like their peers. He really likes it, though wouldn't buy it at these levels. He bought it at 25-cents and sold it at $3.99.
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PAST TOP PICK
Met with management and was impressed with what they had done over the last couple of years. However, last quarter was fairly weak, partially because of the hockey strike. Sell lower-cost beers. Likes this longer-term but there has just been a bit of a hiccup. If you own, continue to Hold or wait for a bit of weakness to Buy. Very weather dependent.