Tickers in this Article: ABV, FMX, BUD, SAM
In running through a screen for stocks near all-time highs, one group that kept popping up was brewers. These stocks are technically already in a bull market and many are emerging from recent bases. Any stock that was able to overcome the declines they suffered during our most recent bear market deserves some respect. The brewers were hit along with the rest of the markets, but ultimately, many of these stocks surged past their prior bull market highs several months ago. After consolidating for the past few months, these stocks are gaining momentum again and are starting to hit new highs.

IN PICTURES: 7 Tools Of The Trade

Companhia de Bebidas das Americas (NYSE:ABV) is a brewer that is hitting all-time highs. ABV has managed to rally almost $100 from its bear market lows in late 2008. It had been trading in a sideways range for the better part of a year until recently beginning to move higher. It cleared an important level near $100 in June and then broke past $110 in September. The $110 level in particular is an area to watch as a possible support area moving forward.

Source: StockCharts.com

Fomento Económico Mexicano, S.A.B de C.V (NYSE:FMX) is another brewer trading near all-time highs. FMX cleared its base in late July and has been steadily rising since then. It has been hugging its 20-day moving average for several weeks as it pushes higher. The $50 level is a very important level to monitor, as this was its prior bull market high in 2008. FMX failed its first test of this level late in 2009 and then needed a few weeks to clear it in 2010. It finally managed to break out this month, which could force the hands of some short sellers.

Source: StockCharts.com

Boston Beer (NYSE:SAM) is another brewer near all-time highs, although it has not yet broken out. However, SAM cleared a huge resistance level near $54-$55 back in April and after a very volatile May, it followed through with a $20 rally into June. It has since settled into a consolidation that is taking the shape of a descending triangle. A move above the $70 level would get my attention as it could set a higher high and clear the trendline marking the top of the triangle. (For more, see Analyzing Chart Patterns: Triangles.)

Source: StockCharts.com

While Anheuser-Busch Inbev SA Sponsor (NYSE:BUD) is also at all-time highs, it should be noted that it didn't start trading until after the financial crisis. However, after trading sideways since it began trading in September 2009 through July of this year, it finally broke out. It initially looked like BUD would fail its breakout after dipping back into its base in August, but it gapped higher in September and took off from there. It is currently extended after a second gap, but showing great relative strength to the markets. The $55 level is one area to watch for possible support on a pullback.

Source: StockCharts.com

Bottom Line
While it's likely that the general markets will need to take a breather soon after experiencing a pretty sharp one-month rally, the benefit of the doubt currently lies with the bulls. When you have an up trending market, it makes sense to look for the strongest stocks, and the brewers currently fit the bill. They have been in a bull market of their own and this trend will likely continue if the markets can continue to head higher. Even if the markets take a breather, these stocks have proved themselves over the past several weeks and may find support relatively nearby. It's likely to take a severe market correction to derail their current trends.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

comments powered by Disqus
Trading Center