MENU

Why the Gage Roads Brewing Co Limited share price is soaring this week

Shareholders of Gage Roads Brewing Co Limited (ASX: GRB) are rallying higher again today after the brewer announced the renewal of its contract with Pinnacle Liquor Group, a subsidiary of Woolworths Limited (ASX: WOW), yesterday.

The shares have risen 8% today to trade at 5.4 cents, which represents a gain of almost 15% since Friday’s closing price.

The announcement has certainly mitigated one of the key risks faced by Gage Roads and its shareholders as Pinnacle is one of the company’s major customers. It’s a three-year extension of the agreement (with a further two-year option, exercisable by Pinnacle) giving it a minimum volume commitment from financial year 2017 (FY17) through to FY19.

However, it isn’t all good news for the business. The agreement included a stepped reduction of minimum volumes during the period, ranging from 1,000,000 case equivalents in FY17, to 950,000 case equivalents in FY18, and then 850,000 case equivalents in FY19.

Those are only minimums, and Gage can sell more cases if demand is strong enough. While one key risk has now been removed for three years, Gage will now need to prove its ability to remain relevant with consumers over that time.

Could these just released franked dividend picks turn $15,000 into over $30,000?

When renowned dividend investing pros like Andrew Page issue buy alerts, it pays to listen. Because investors who followed Andrew's recommendation of Australian Pharmaceuticals in early 2015 could've doubled their money in just over a year, turning $15,000 into over $30,000 by the time he recommended they sell and lock in their profits. Chances are you won't want to miss uncovering the names of Andrew's newest share recommendation and short list of 3 dividend Best Buys Now Shares.
So click here to learn more about these potentially life-changing shares.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.