New Age Beverages [NASDAQ: NBEV] is a very polarizing stock. Investors seem to be extremely bullish or overly bearish on the beverage company.
Before you let one interpretation of New Age’s most recent events sway you one way or the other, do your research so you can come to your own conclusions. To get you started, here is a brief overview outlining some of the issues, events, and realities that anyone investing in New Age Beverages should know.
First, let’s look at what the company does.
What Does New Age Beverages Do?
New Age Beverages [NASDAQ: NBEV] is a drinks company based in Colorado and Utah. The company specializes in what it calls “healthy lifestyle” products., including “organic, natural and other better-for-you healthy beverages, liquid dietary supplements, and other healthy lifestyle products.”
This includes tea and coffee as well as kombucha, energy drinks, and others. New Age sells these drinks direct to its consumers as well as through retail chains and distributors.
New Age Beverage’s key differentiators are what’s inside, or rather what isn’t. The company’s products do not have any high fructose corn syrup nor any ingredients that come from genetically modified ingredients. They also do not have preservatives. New Age uses only natural ingredients.
The company also differentiates itself on the functional performance of its products. New Age believes that these features allow the company to compete effectively in a world that is slowly turning away from carbonated beverages and soft drinks, toward beverages that support a healthier lifestyle.
Understanding New Age’s History
New Age Beverages [NASDAQ: NBEV] has been evolving steadily for the past ten years, leveraging strategic acquisitions to develop and refine its brand.
New Age has been around since 2010, but then, it was called American Brewing and specialized in craft brewing. In 2015, the company bought the assets of a company called B&R Liquid Adventure. These included a brand called Búcha ® Live Kombucha.
This acquisition set American Brewing on a new path. It divested itself of its craft brewing assets to focus on healthy beverages. By 2016, American Brewing decided to adopt the name of that kombucha, becoming Búcha, Inc.
Búcha decided to continue growth through acquisition, buying assets from Xing Beverage as well as New Age Beverages, Aspen Pure, and others, and to change its name once again.
At this point, the company became New Age Beverages and moved its operations to Colorado. New Age’s expansion activities continued after the move. In 2017, the company bought several assets from Premier Micronutrient Corporation as well as Maverick Brands, including Coco-Libre.
It also purchased thee Marley Beverage Company. In 2018, New Age combined its business efforts with a Utah-based company called healthy beverage company called Morinda.
Today, New Age operates as four subsidiaries, including Morinda, NABC, NABC Properties, and New Age Health Sciences, and its brands include Coco Libre, Búcha, Xing Tea, Bioshield, Tahitian Noni Juice, and Aspen Pure.
It also has a lip and skin care brand called TeMana. The company serves more than 60 countries and has thousands of outlets. Its products are carried in major chain grocery stores, pharmacies, and convenience stores in addition to e-commerce, food service, juice shops, and medical channels.
Is New Age Beverages Stock a Buy?
New Age Beverages [NASDAQ: NBEV] has a few important strengths that speak to its credit. These advantages are compelling reasons to think the company will remain competitive.
Many competitors in the lifestyle beverage industry are smaller, craft producers. These rivals simply do not have the resources that New Age Beverage enjoys, and this limits their reach.
In turn, New Age has a sort of brand advantage. Early adopters of many lifestyle beverages find that New Age’s brands are the ones they see everywhere, and this establishes the company’s expertise in a powerful way.
New Age Beverages also has a very diverse portfolio. Much like maintaining a well-distributed investment account, New Age’s brand portfolio is very diverse.
It emphasizes different healthy beverage brands as well as various markets, providing the company protection against the inevitable fluctuations in popularity that many brands, especially those with a “fad” component, experience.
The company has a robust sales model as well. In many ways, it is also well diversified.
It sells to stores as well as to more than 300,000 distribution centers. It has better than 6,000 outlets and relationships with over 60 brands.
New Age sells direct too. It has over 120,000 direct customers who collectively bring in more than $150 million every year.
Unlike many “healthy” beverage companies, New Age has conducted research trials and received patents on those developments.
The company believes its intellectual property will protect it from would-be competitors and open up opportunities for expansion with the US military as well as pharma-grade medicinal applications such as neural protection and cardiovascular health.
New Age continually invests in research and development too, so the company may enjoy more benefits down the road.
What are the Risks of Buying New Age Beverages Stock?
That said, New Age Beverages [NASDAQ: NBEV] still experiences some risk. Health benefits aside, the company is built on very trendy beverages. One of its upcoming offerings is a line of beverages that are infused with CBD.
If a new product becomes available and steals market share, it could be hard for the company to recover.
In addition, many healthy beverage companies do not have the resources to expand, but that doesn’t mean things will always be that way.
A larger company could purchase one of those craft producers and give New Age stiff competition. Likewise, a craft producer may launch in one of the countries that New Age serves and erode market share.
Then, there is the money.
New Age also owes former Morinda shareholders a large chunk of cash (around $15 million) and that is ON TOP of the fact that the company has never actually turned a profit. It lost $12.1 million in fiscal 2018 and $3.5 million in fiscal 2017.
New Age Beverages Stock: Buy or Sell?
New Age Beverages is carrying with is a one-year target estimate of $8.75, which would be a return of 83%, if the company makes it there, but New Age is very volatile.
It is trading on a 52-week range of $1.30 to $9.99. In other words, the company is a highly speculative stock, so buyer beware.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.