New Age Beverages Corp (NASDAQ: NBEV) is back to where it started the year after experiencing wild swings in recent months. However, the stock could be on the brink of powering higher as a 400% year-over-year increase in revenues.
NASDAQ NBEV Price Analysis
The maker of healthy beverages has served a catalyst likely to strengthen the stock’s market sentiments at a time when it is struggling for direction in the market. Expansion of the Company’s Bucha Live Kombucha brand into 7-Eleven stores is another development that continues to prop up market sentiments.
The Utah based organic natural beverage company has also moved to strengthen its growth prospects by launching its CBD product portfolio into 60 markets worldwide. With the stock currently trading at the lower end of a tight trading range, a potential bounce back could be in the offing as investors take note of recent developments that signal potential growth in sales.
New Age Beverages price action appears to have found strong support at the $4.80 level, from where it is likely to surge in response to the improving underlying fundamentals. The immediate resistance standing in the way of the emerging uptrend would be the $7.20 level.
A rally followed by a close above the $7.20 level should bring to an end the consolidation phase that has seen the stock’s price action limited to a tight trading range. Conversely, failure to stabilize above the $4.80 support level could result in the acceleration of the sell-off wave back to the $3.20 level, the next support level.
Why Is New Age Beverages A Bounce Back Play
New Age Beverages is a potential bounce back play on investors reacting to recent developments that underscore underlying growth. The beverage company is fresh from posting impressive numbers for Q1, depicted by a 400% increase in revenues that came in at $60.5 million.
The Company’s net loss shrunk to -$1.6 million from -$2.7 million as of last year as EBITDA increased to $0.6 million compared to a net loss of -$2.1 million as of last year.
During the quarter, the Company’s balance sheet significantly strengthened to $110 million versus $42.5 million as of the end of last year. Positive cash flows of $11.4 million leave the Company well financed it pursue strategic investments that have the potential to enhance core business growth.
“With our strengthened balance sheet and financial flexibility, we look to accelerate our business in the second half of 2019 buttressing our organic growth coming from the launch of our CBD portfolio, our brands now entering national distribution in the US,” explained CEO Brent Willis.
In keeping up with the sales growth in Q1, New Age Beverage Company has inked a strategic partnership with 7-Eleven stores. Conversely, the Company’s Bucha Live Kombucha product line will now be made available nationally, at participating 7-Eleven stores.
The distribution agreement should enhance Kombucha sales, currently ranked among the fastest growing category of all non-alcoholic beverages. The brand registered a 31.4% year over year increase in sales in 2018 thanks to improved household penetration.
In addition, New Age Beverages has also set sights on the global markets in pursuit of opportunities for growth. The Company has consequently launched its line and shipment of CBD creams, lotions and oil onto 60 markets worldwide under its Health Sciences Division. The products are to be sold through more than 30,000 direct-to-consumer product consultants as well as through a dedicated e-commerce platform.
“The Health Sciences Division has worked exhaustively bringing all of our science, patented formulas, insights and more than ten years of study to deliver superior clinical products to consumers. Our launch of CBD leverages all of that differentiated expertise and specific study of cannabinoids over the past number of years for the benefit of these new products,” said M.D Jerry Haase.
Q1 earnings report signals a company growing at an impressive rate and firing on all angles when it comes to operational efficiency. Revenue growth, product line expansion, as well as expansion into new markets, are some of the potential catalysts likely to cause New Age Beverage shares to climb higher after a period of consolidation.
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Disclosure: We have no position in NASDAQ NBEV and have not been compensated for this article.