Wednesday, September 19, 2018

© Reuters.  Seltzer bubble ready to burst?© Reuters. Seltzer bubble ready to burst?

  • The maker of La Croix, National Beverage (NASDAQ:FIZZ) has been about a five-bagger over the last two-plus years alongside the surging popularity of flavored seltzer-water.
  • “It’s not that we don’t like the company, it’s that it’s too expensive,” says Credit Suisse (SIX:CSGN)’s Laurent Grandet, who rates the stock at Underperform.
  • LaCroix makes up about 35%-40% of National’s portfolio (the company also sells Shasta sparkling water, Rip It energy drinks, and Everfresh juices, all growing at flat to single-digit rates).
  • Among the bearish catalysts might be slowing earnings growth – from 75% in 2016 to an expected 27% in this fiscal year … This for a stock selling for 34x earnings.
  • Then there’s CEO Nick Caporella who owns nearly 74% of National’s stock – it makes for a small float and volatile action. CS’s Grandet finally got to meet with the “wizard” last week and came away unimpressed thanks to the absence of initiatives to expand convenience store sales. As for an acquisition, that’s less likely as competitors launch their own lines.
  • Source: Bloomberg’s Kristy Westgard
  • Now read: National Beverage Looks A Little Bubbly

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