A Marijuana Stock You Likely Haven’t Considered
For the most part, beverage companies aren’t the go-to choices for growth investors. The most well-known ones, such as The Coca-Cola Co (NYSE:KO) and PepsiCo, Inc. (NASDAQ:PEP), established their market positions decades ago and are now more considered dividend investments than high-growth plays.
Still, one beverage company could offer investors some exciting returns down the road: New Age Beverages Corp (NASDAQ:NBEV).
New Age Beverages Corp: This Pot Stock Deserves a Look
Headquartered in Denver, Colorado, New Age is an omni-channel healthy beverage company. The company has access to traditional retail, e-commerce, direct-to-consumer, and medical channels and sells its products across all 50 states in the U.S. and in more than 60 countries around the world.
With a market capitalization of just over $380.0 million, New Age Beverages Corp is not exactly Coca-Cola. Still, the company deserves investor attention for a very simple reason: it is getting on the cannabis profit train.
The keyword here is cannabidiol (CBD), which is one of the more than 100 identified cannabinoids found in cannabis plants. However, unlike smoking weed, consuming CBD by itself does not produce the classic psychoactive marijuana high. However, many people have found CBD useful in managing anxiety, pain, inflammation, and depression.
As a result of CBD’s non-psychoactive nature and therapeutic benefits, the market for CBD products is projected to grow rapidly. According to a recent study by BDS Analytics and Arcview Market Research, the collective market for CBD sales in the U.S. is expected to surpass $20.0 billion by 2024. (Source: “U.S. CBD Market Anticipated to Reach $20 Billion in Sales by 2024,” BDS Analytics, May 9, 2019.)
New Age Beverages Corp stands ready to capitalize on that expanding marketplace. Last October, the company debuted its initial portfolio of CBD-infused beverages, which included relaxation teas, sparkling waters, and shots. (Source: “New Age Beverages Corporation Debuts Its Initial Portfolio of CBD-Infused Beverages,” New Age Beverages Corp, October 10, 2018.)
Earlier this year, New Age Beverages Corp announced the launch of its CBD products globally. The company started shipping its portfolio of CBD oils, creams and lotions on April 25, 2019. (Source: “New Age Launches CBD Globally,” New Age Beverages Corp, April 25, 2019.)
Of course, it’s yet to be seen how successful New Age Beverages Corp will be at capturing the CBD market. But here’s the thing: right now, the company’s business is already booming.
In the first quarter of 2019, New Age Beverages Corp generated $58.3 million in net revenue, representing a whopping 404% increase from the $11.6 million earned in the same quarter year ago. (Source: “New Age Beverages Corporation Announces 1st Quarter 2019 Net Revenue Growth of 404%,” New Age Beverages Corp, May 9, 2019.)
The company also had a stronger balance sheet, with $110.0 million in cash at the end of March, as compared to $42.5 million at the end of 2018.
Management is confident that best is yet to come. The company’s Chief Executive Officer Brent Willis said the following:
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, and a number of other initiatives launching in the second quarter and throughout the rest of the year.
New Age Beverages Corp (NASDAQ:NBEV) Stock Chart
Chart courtesy of StockCharts.com
New Age Beverages Corp’s growth rates should cheer up investors. However, because New Age is not a pot producer, NBEV stock often gets ignored by those searching for marijuana stocks. As a matter of fact, despite the bright outlook of its business, the stock is actually down 10% year-to-date.
Trading at $4.76 per share, New Age Beverages stock remains one of the most overlooked names in the marijuana industry. If the company can deliver on the CBD front, its stock price could get much, much higher.