UPDATE
5-23-2019:
On Friday May 17th New Age Beverages began trading at $5.15, and ended the session at $5.19. The following day, Saturday, we released this piece, “Who’s Winning Now?” Yesterday, Wednesday May 22nd, NBEV shares rose more than 4.6% to close at $5.63.
On May 16 came the report that initial sales of New Age Beverages’s Noni+Collagen “topped $600,000 in 3 days,” in Chinese markets. In addition, the product’s sales in “initial test markets in Japan, Taiwan and the US also exceeded expectations.” Further rollouts this year are set to include Europe, Latin America, and other Asia Pacific markets.
Based on yesterday’s closing price of $5.63, NBEV shares have appreciated by 8.47% in the three trading sessions since we launched this piece.
Beating
the back alleys and broken parking lots for winners is a sucker’s game, unless you find one–the rare one just beginning to ramp. But that’s the thirsty dirty work few are ever paid for. Is New Age that rare answer to both a big thirst and stock brilliance?
Back in 2016 along the dynamic front range of Colorado one drink bought another and a drinks company hatched. Relief came to the few as health snapped into view. Now years later a healthy lifestyle has become much more than a fad and pop sugar is now seen as brightly-packaged poison. And? And people enjoy feeling good, and like things that help in that quest. Functional beverages help.
Water, tea, and energy drinks are functional and NBEV features those and more. Rivers run and so do trends and people follow both, usually with something to drink. That’s New Age’s business. Their business could be catching. It caught our eye, and Wal-Mart’s. Now STOCKjAW’s sharing our view with you. Who’s Winning Now? New Age–Peace and Profit.
Better
back up sucker. Oops–never mind. I’ts a stroll-off G slam. New Age simply crushed it over the right field wall in Q1, bases loaded. What can you say when your revenue explodes 404%? And really, what’s left to say when your gross profit sun-bursts 1375%? You say “Don’t call us. We’ll call you.” Or maybe you say “Contact my people,” as you up-glide the smoked limo glass.
“New Age is the fastest growing stock across major exchanges over the past three years–up 3000%.” –New Age Beverages(NBEV), Form 8-K for May 16, 2019.
Scads of companies trundle like a hospital food trolley while others burn for their target like bone slicing falcons. Worlds separate the two. How about healthy lifestyle stocks? New Age Beverages(NBEV) appears to know precisely where they want to go. In fact they say so clearly. They’re hell-bent on becoming the largest “health and lifestyle brand.” They’re on their way. In fact, if you blink you will assuredly miss yet another serious growth event in this company’s hot push toward industry leadership. Meanwhile Coke(KO) feels more as if it’s standing still.
Organic
is a term applicable to both NBEV the company and it’s galaxy of brands and individual offerings. Companies have life cycles just like everything else. Steve Jobs brought Apple back from the brink of extinction with the launch of the Mac. A fledgling tech company then swelled into a serious giant and then the largest company in history. Now Apple is mature and facing a matured smartphone market they more than anyone created. Trace that back to Jobs and the Mac.
New Age is now having their moment. Between their March and May quarters the company climbed well-beyond the cloud layer and into the rarefied light. NBEV lives now in a very sharp light, as an international brand of brands. When you partner with Wal-Mart you’re moving big time, on the biggest retailing stage in fact.
Then suddenly came 7-11, and its’ 68,000 store, 17 country footprint, and the launch of CBD-infused products, and an extension of licensing with the Marley brand, a now wholly-owned New Age asset. Any one of these would be for most companies a crowning annual achievement.
Mere weeks back New Age Beverages dropped a Daisy-Cutter news bomb on the entire non-alcoholic drinks world. NBEV is now retailing through the Wal-Mart monster. Oh, and Monster–remember how that stock soared?
NBEV is not Monster–it’s organic, and healthy. The only thing organic about Monster is the water. If you enjoy buying low and selling higher, then paying very close attention to trends is great. “The trend is your friend.” Fact. French fries are delicious but try flogging a soggy box of those.
“As a percentage of net sales, gross margin increased to 66% versus 23% in the prior year…” –New Age Q1 Press Release.
New Age Beverages(NBEV:NASDAQ.)
Of course.
NBEV is anything but a core holding. It’s a speculative play, pure and shaky. Reuters says “Outperform” while CFRA says “Sell.” New Age has indeed expressed it’s shaky nature displayed by a radically wild 52 week range between $1.30 and $9.99. Wow. Can you sleep on that, while sober? We can. But we hold a relatively small slice. Again, it’s a speculative stock. Those are the ones that blow up, at night, in your garage. Or they spike 32% on a single press release.
NBEV is set to report Q2 on August 13th. Once again the consensus estimate is for a two cent loss, with a wide range from three other analysts now covering the company, $0.02 to -$0.08. This is a company clearly closing in on positive non-GAAP numbers. Perhaps that’s because they’re expanding revenue at a 5 year annualized rate of 121.9%.
CFRA “Sell” rating landed on May 10 , eight days ago. CICS Sector: Consumer Staples, CICS Industry: Soft Drinks. Risk Evaluation? High. What don’t they like? “Valuation, quality, and financial health.” What do they like? “Street sentiment, growth, and price momentum.”
Schwab
data shows a current market cap. of 391.3m, with shares outstanding of 75.4m, and that disturbing 28% short interest. Institutional ownership provides only scant stability here, at 12%.
And China exposure? Yes, but only at an infinitesimal level. New Age now operates in over 60 countries however, including Asia. And then came the cane sugar. Huh? Who uses cane in organic products for the “healthy beverage/lifestyle” end market? “Aspen Pure” as their bottled water offering seems a better call, in full keeping with their health conscious persona. But then there’s their “Radiation protection” product in Korea, about which they said no more. Huh? And then came a glancing enigmatic comment concerning a development with Tilray. Huh?
Back on April 25 the company launched their CBD-infused line under the brand name ‘NHANCED. New Age is a distribution octopus. The CBD line for example is omni-channel, distributing through all five of its channels – direct-to consumer, direct-store-door, traditional retail, e-commerce, and their medical channel.
Despite
a three year history the company is in it’s very early days. “We’re still in the first mile of getting these brands out there…We’ll have positive cash flow for this quarter, and next,” says CEO Brent Willis. He continues “Every month we have top-to-top meetings with major retailers…For Q2 we expect revenue of 65m and positive EBITDA.” And about China? “China’s actions had nothing to do with NBEV, but rather the industry. They were preventing the industry from meeting.”
In Q1 New Age created more revenue than in all of 2018. One year ago the company had less then $100 thousand bucks. Now they have over $100 million. In the quarter just reported they grew their net revenue by 404%. They exploded gross profit by 1375%, or 1381% as stated by their CFO on the conference call.
Investing’s a game of timing, and patience. Companies are stories and they develop over time. By far the biggest gains come in the early ramping years. Most companies never really ramp. But some do. Determining who that will be, and being there when, is why we invest. Good luck.
New Age Beverages Corporation
Q1, 2019 Earnings Press Release
https://newagebev.com/en-us/our-story/press-releases
Form 8-K May 16, 2019
http://archive.fast-edgar.com/20190516/APAZU22CZ22272ZZ222F2CZIDKR9ZS22ZVB2
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