The time might be right to buy The Alkaline Water Company Inc (NASDAQ:WTER) on the dip. The stock is starting to show signs of breaking out, after a major correction late last year. With the overall industry turning bullish and the company’s fundamentals inching higher, the stock is turning out to be an exciting risk-reward play as it continues to trade at a discount.
WTER Share Price Analysis
The stocks sentiments have received a significant boost in recent weeks on the company delivering yet another record-setting quarter on sales growth. The company signing a distribution agreement with Whole Foods Market could point to yet another record-setting quarter when it comes to revenue growth.
The company has also expanded its packaging capabilities with a co-packaging partner in Nevada as it eyes the launch of new products to address growing demand. If recent developments are anything to go by, then The Alkaline Water might as well have done a good job in reaffirming its growth prospects.
Investors are slowly taking note of a string of positive developments that affirm the company’s long-term prospects. After a recent spike higher, the stock appears to have hit a critical resistance level at the $4 a share level.
A rally followed by a close above the critical resistance level should reaffirm the long-term uptrend, setting the stage for the stock to bounce back to 52-week highs. Sell-offs should experience strong support at the $3.20 level, a breach of which could open the door for bears to push the stock back to the $2.70 level.
About Alkaline Water
The Alkaline Water is a leading producer of alkaline drinking water. The company produces and distributes the bottled alkaline water under the brand name Alkaline88 across the United States. Alkaline 88 is rated as among the fastest growing premium bottled water as it is enhanced with trace minerals and electrolytes.
Why is WTER a Breakout play?
The Alkaline Water is a potential break out play as its flagship product, alkaline88, continues to gain traction in the market. A 102% increase in sales in the recent quarter marked yet another record-breaking quarter when it comes to sales growth. Sales accelerating to $7.69 million propels Alkaline88 to the second fastest growing branded water in the U.S.
“Since the end of our third quarter, Alkaline88® has brought in three important partners and introduced a new line of flavored waters into the market. We’re also anticipating FDA clearance on our full-spectrum hemp extract products and anticipate bringing them to approved markets before the end of our fiscal year,” said CEO Richard Wright.
In a bid to accelerate sales growth, The Alkaline Water has entered into yet another distribution agreement. A deal with PITCO Foods opens the door for the company’s flagship product to be made available in over 12,000 retail stores across California and Nevada. The agreement is also poised to grow and reinforce the company’s sizeable market position.
In addition, the company has signed an agreement for the distribution of the company’s products in all Whole Foods Southwest stores. Up to 30 Whole Foods, will carry Alkaline88, bringing to more than 100 whole Foods location that carry the product.
“Whole Foods and other natural food chains are a significant part of our sales growth strategy for our 2020 Fiscal Year. […] We expect to be in all Whole Foods stores by the end of our 2020 Fiscal Year,” said Mr. Wright.
The company has also confirmed plans to enter the CBD space with the launch of CBD-infused alkaline water products. The new brand should leverage the company’s distribution network of 47,500 retailers and should go a long way in diversifying the company’s revenue streams.
What Next For the Alkaline Water?
Revenue growth from the Alkaline88 brand attests to the company’s long-term prospects. The company moving to strengthen its product line with a CBD infused Alkaline88 brand is a plus that should continue to strengthen the stocks sentiments in the market.
The Alkaline Water has started showing signs of climbing the ladder after a steep pull back from record highs late last year. The stock remains well positioned to continue rallying helped by improving fundamentals.
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Disclosure: We have no position in WTER and have not been compensated for this article.