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5/24/2010 1:20:50 PM Eastern Time

Big Cap Tech Finds Elusive Buyers
By Charles Payne, CEO & Principal Analyst

Although the market has meandered all day, it is okay to say that it has done well today based on the fact it could be down much more. On that note, the NASDAQ composite is actually higher, led by the usual suspects of Apple (AAPL), Google (GOOG), and Amazon (AMZN). It's still rough in Europe, where confusion and a lack of faith in measures provided thus far continue to weigh on equity markets. In the meantime, we have a fair amount of economic data to sift through this week ahead of the big jobs report next week. If conventional wisdom holds there are 475,000 to 575,000 new net jobs this month then at some point stocks will begin to react ahead of the news and forget Europe's self-inflicted wounds.

The big report out today focused on housing via existing home sales. The report was mixed, (aren't they all) and continued to pose questions about the true health of housing, especially now the some government incentives are not around anymore.

Existing Home Sales
By: David Urani, Research Analyst

Existing home sales posted a 7.7% month to month increase on an annualized basis in April, which also represented a 22.8% increase year over year. That brings existing sales to a rate of 5.77 million annually, beating the consensus estimate of 5.60 million. Once again, the data showed an increase as the April 30 tax credit deadline approached and buyers rushed for their last chance to get a deal. The boost was especially large in the Northeast, where there was a 21% annualized increase month to month. On the other hand, there was a 6% annualized dip in the West, which could reflect buyers waiting for a $10,000 tax credit in California that began on May 1. Prices also seemed to firm up, with the median price increasing by 2.1% month to month.

It's a good report at first glance, but these days it's just as important to look at the supply side, and that was a stinker. The supply of homes increased by 11.5% month to month, or 418,000 units. In terms of units, it was the biggest increase since April 2008. The increase reflects the continued increase in mortgage foreclosure rates, and possibly banks and other property owners deciding to put their pending "shadow inventory" onto the market. Whatever the case, the fact that there was such a large increase in inventory at the same time that the tax credit was running at full steam is a major alarm bell. Assuming demand will wane after the tax credit; one has to be concerned about pricing, with supply already outrunning demand before the tax credit even ended.

Summary

I can't wait for the last hour of trading; I think there could be a buy program into the close. Right now, it's all about big cap tech names getting all the action, but look for buying to spread broadly.

Long Idea: BOSTON BEER COMPANY INC (THE) (SAM) @ $60.87
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Trading Parameters
Entry Price	Entry Limit	Stop Loss	Trading Target	Target	Long-term Target	Options
$60.87	see comments	$55.00	N/A	$70	$73.00	N/A
Options Trade Parameters
Type	Option Symbol	Entry Price	Strike Price	Expiration Date
Call	SAM100918C00055000	$8.70	$55.00	9/18/2010

BACKGROUND: The Boston Beer Company, Inc. produces and sells low alcohol beverages primarily in the United States, Canada, Europe, Israel, the Caribbean, the Pacific Rim, and Mexico. The company markets approximately 20 beers under the ‘Samuel Adams' or the ‘Sam Adams' brand names; 8 flavored malt beverage products under the ‘Twisted Tea' brand name; and 1 hard cider product under the ‘HardCore Cider' brand name. It also produces malt beverages and hard cider products under contract for third parties. The company sells its products to a network of wholesale distributors, who then sell to retailers, such as pubs, restaurants, grocery chains, package stores, stadiums, and other retail outlets. The Boston Beer Company, Inc. was founded in 1984 and is based in Boston, Massachusetts.

SKINNY: The brewer of Samuel Adams Beer has been on a solid role over the past six months, and despite an earnings miss in the fourth quarter of 2009, the Company bounced back during the first quarter. In its most recent quarter, SAM surpassed the Street's earnings estimates by a whopping 83% (over the past four quarters, the company has beaten the Street by an average of 48%). The company is ramping up production at its Latrobe, PA brewery and is doing so on a quicker schedule (and at a higher efficiency), which is flowing through to the bottom line much quicker than expected. One of the most popular seasonal beers, Sam Adam's Summer Ale is hitting shelves now, and there is rumors of another summer seasonal brew set to reach the market soon. Estimates for the current quarter and current year have also been on the rise over the past 90 days. The stock was one of the few that traded as low as a penny on the "flash crash," but has since rebounded and looks poised to move higher. The stock currently trades with a PE multiple of 23.4x TTM earnings, which is at the low end of its five-year range (high was 52.24x while the low was 20.26x). We are looking for the stock to move to $70.00 and then to $73.00, use $55.00 as a mental stop-loss.

Key Fundamentals
PEG	Book Value	Institutional Holdings	Price/Sales	Average Daily Volume	Shares Outstanding
1.51	11.94	8	1.92	99.9K	14.01M
Market Value	Insider Activity	52-week High	52-week Low	Annual Earnings Estimate
846.27M	22 Sales	63.17	14.24	2.83