EXCLUSIVE REPORT – The incredible value case for The Alkaline Water Company (NASDAQ:WTER | CSE:WTER | F:AWJA | SG:AWJA)
Finding a stock that has genuinely been overlooked and represents good value can be tough.
The market doesn’t like to give away too many gifts.
Yet investors are always hungry for them.
Every now and again, you will come across a company where the numbers do ALL the talking.
The value case here is one of the most clear-cut you will come across this year.
At its current level, The Alkaline Water Co is trading at about 1.25X its future sales.
Its larger (but much slower growing) competitors trade at about 4X their future sales.
It’s really that easy.
Closing this obvious valuation gap would require The Alkaline Water Co’s shares to rise THREE TIMES.
And that’s just on the basis of a fundamental re-rate.
If The Alkaline Water Co starts to attract takeover interest, which often happens in the ‘valued added’ water space, then the premium paid could be even greater.
This is a truly mouth-watering opportunity.
SPECIAL REPORT – a prime takeover target in the making – The Alkaline Water Company (NASDAQ:WTER | CSE:WTER | F:AWJA | SG:AWJA)
Founded in 2012, The Alkaline Water Company (NASDAQ:WTER | CSE:WTER | F:AWJA | SG:AWJA) has achieved phenomenal growth over the last five years. It promises to deliver a whole lot more over the next 18 months.
Many athletes and professional sports stars swear by the superior hydrating power of alkaline water. It is already present in most professional locker rooms and is gaining in popularity at an accelerating rate.
Reflecting this and from a standing start, The Alkaline Water Co’s flagship brand, Alkaline88®, is now ranked as one of the top ten ‘value-added’ water products by dollar sales in the United States.
This is an exceptional achievement.
Even more so, when you look at the competitors it is up against.
There is no doubt The Alkaline Water Co has punched well above its weight class. The signs are that it is preparing to move up a division.
With a single minded focus on sales, this company has been set up to win.
Its lean operations and Direct Store Distributor network could be bolted onto another firm with no problem at all.
But that alone is not what makes The Alkaline Water Co stand out.
This company outperforms on all measures.
Its low-capital business model has been so successful that it generates over $2 million revenue per person employed!
And that figure has significant potential to increase.
The Alkaline Water Coonly has 27 staff, over half of whom are out there selling.
All the time.
Day in, day out.
Coronavirus or no coronavirus.
This ambitious team has delivered consistently exceptional results.
According to Archpoint, The Alkaline Water Co is the eight-largest value-added water supplier in the U.S. and the third-fastest growing of the top ten vendors.
In 2015, sales were $3.7 million.
Last year, they had surged to $40.2 million.
That is equivalent to an astonishing average annual growth rate of 61%!
At last count, Alkaline88® was available in 72,000 stores across the United States.
That represents just 8% of the total 1.08 million outlets where it could be sold.
This leaves plenty of room for growth – something extremely important to any future suitor of the company.
Regardless of whether The Alkaline Water Co gets bought out, there is a great deal of immediate scope for rapid expansion.
The company has already proven it can grow extremely quickly, using its own resources.
This was confirmed by its most recent year-on-year sales figures.
The company recorded record sales in Q4 of approximately $12 million.
Despite the economic ravages of the coronavirus, The Alkaline Water Co saw March’s revenue shoot up 114% year-on-year. In April, it jumped an incredible 171%!
But what could prove to be the most decisive near-term stat of all is how many new end-consumers The Alkaline Water Co has recently secured.
Over March and April, roughly 30% more people consumed Alkaline88®.
How the company achieved this is a fascinating little story of smart positioning, entrepreneurial action and a small slice of luck…
How Covid-19 MASSIVELY boosted sales of Alkaline88®
Where most of its competitors suffered severe Covid-19 supply chain disruption, the firm put Alkaline88® in the hands of more consumers than ever before.
Having taken the strategic decision several years ago to base all of its co-packers in the U.S., this plan paid off spectacularly when borders closed in response to the pandemic.
Chief executive Ricky Wright immediately saw a significant opening.
He made it his top priority to go and see every one of the company’s main suppliers across the country to make sure his business was their “number one concern.”
Where the likes of Nestles, Niagra and the other major players in the space struggled to replenish dwindling stores, Alkaline88® seized valuable shelf space.
And there was one surprising twist to this tale.
The panic buying that gripped the nation in early spring led retailers to restrict bottled water sales to one case per family.
On first reading, you might think this was bad news for The Alkaline Water Co and that Wright’s crazy dash across the country was in vain.
Well think again!
In rationing Alkaline88®, retailers did The Alkaline Water Co a HUGE favour.
You see, thanks to its unique taste profile, Alkaline88® has exceptionally strong brand equity.
Repeat custom is one of the major reasons this company has been able to grow as fast and efficiently as it has. The Alkaline Water Co hasn’t had to spend anywhere near as much on marketing as its competitors to build its business.
In fact, Covid-19 has inadvertently turned out to be one of the company’s most successful promotional drives ever!
That’s a positive story you won’t hear too often in the locked-down world in which we now live.
Moving forward, the question is whether The Alkaline Water Co can capitalize on this good fortune and carry its momentum forward into 2021?
Given The Alkaline Water Co’s clear undervaluation relative to its peers, a consolidation of recent sales and shelf space growth should see its shares move substantially higher.
Download our SPECIAL REPORT to learn what the newly-seized shelf space means in the long-term for The Alkaline Water Company (NASDAQ:WTER | CSE:WTER | F:AWJA | SG:AWJA)
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Authors: Ben Turney and Daniel Flynn
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