Shares of New Age Beverages Corp (NASDAQ:NBEV) have outperformed the broader stock market and the cannabis sector in 2019. A 30% plus pop since the start of the year, attests to the stocks stellar performance, in what is turning out to be an inflection year, after the underperformance of the second half of 2018.
NBEV Stock Catalysts
The recent spike can be attributed to two key developments. Top on the list is a bounce-back of the overall cannabis sector that has turned bullish in recent months. The sector is on the rise in part because of the passing of the Farm Bill 2018 in the U.S.
The bill making it legal to grow, process and distribute industrial hemp has given rise to some sense of credibility and confidence in a sector that has always been shrouded in uncertainty. The second reason why New Age Beverages is popping up in the market has to do with the confirmation that the company is poised to start producing and distributing Bob Marley branded CBD-infused beverages.
Share Price Analysis
The developments have helped shore investor confidence in the stock, depicted by high turnover in traded shares in the market. The stock has since resorted to trading in an uptrend after coming under immense short selling pressure in the second half of 2018.
After bottoming out of the $3 a share handle, New Age Beverages has rallied by more than 90%. With the stock trading in an uptrend, pullbacks have emerged as buying opportunities from where bulls have come in and continued to push the stock up.
With the stock currently trading at the $6.31 level, it faces stiff resistance at the $7.20 level. A breach of the resistance level should open the door for the stock to make a run for its 52-week highs of $9.99. On the downside, the stock faces immediate support at the $6 a share level.
A sell-off followed by a close below the critical support level could open the door for short sellers to push the stock to the $4.80 level, the next substantial support level.
New Age Beverages casts itself as a beverage company focused on the development, sales, and distribution of beverages. The company’s product pipeline is made up of RTD tea, RTD coffee as well as energy drinks and relaxation drinks. In addition, the company has expanded its footprint into the cannabis sector, where it is pursuing opportunities via cannabis-infused drinks.
Marley-Branded Cannabis-Infused Beverages
New Age Beverages stock is surging in response to the announcement the company is planning to leverage one of the most revered reggae musicians to gain a head start in the cannabis-infused sector. The company has signed an agreement that paves the way for it to develop and distribute Bob Marley branded cannabis beverages.
A deal with the reggae musician estate opens the door for New Age Beverages to combine its own global retail distribution footprint with one of the most recognizable marijuana symbols. The first product to hit the market as part of the deal will be Marley+CBD Mellow Mood Relaxation drinks. At the start, the company is to target customers in crucial marijuana markets of Colorado, Oregon, and Washington.
“From the moment the CBD movement began, I’ve been receiving calls nonstop asking when we’d be going to market with a Marley+CBD product. Under the Marley brand platform, we are able to leverage a massive global brand with ties to healthy cannabis use, to ultimately grow a beverage brand beyond anything we have seen to date,” said Michael Cunningham, Senior Vice President of Sales for New Age.
The unveiling of the Bob-Marley branded products comes just days after New Age Brands confirmed the global expansion of its Noni-Collagen beverage, following record sales. The company has already registered over $4 million in revenue in the first two months in initial test markets. Plans are already underway to make the products available in 50+ additional countries in Europe Latin America and Asia Pacific markets, in pursuit of new sales channels.
New Age Beverage price gains in the market look set to persist, as the company appears to be firing on all cylinders when it comes to product development and revenue generation. The stock looks set to continue edging higher, back to 52-week highs, given the bullishness in the cannabis sector.
That said New Age is an ideal play given the bullish sentiments in the industry and the fact that underlying fundamentals have improved a great deal.
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Disclosure: We have no position in NBEV and have not been compensated for this article.