Everybody Deserves a Second Chance
It’s been a wild few days for the market. And we’re heading into a holiday weekend here in the States.
And I’m assuming you don’t have a lot of time on your hands and are pretty burned out on financial news this week.
So, I’m going to keep today’s article short and to the point. That way, you can take action and then get started enjoying some much-needed R&R.
You’re Saying There’s a Chance?
Back in April, I wrote about a company that had turned the coronavirus lockdowns into an incredible opportunity.
It had a nationwide distribution chain, but because it was still a smaller brand, it had kept pretty tight control of the process of getting its products to consumers.
So, while other larger brands struggled to get their packagers and distributors back up to speed, this company was able to fill all that empty shelf space the bigger guys left behind.
And that efficiency has shown through in every earnings report we’ve seen since. Literally every month since I last wrote about them, the management team has produced new record sales numbers.
And the share price has responded pretty well...
When I last wrote about this company, its shares were still reeling with the rest of the market. But that wouldn’t last long.
As management reported record-setting month after record-setting month, the stock shot up 268%!
Those of you who took my advice and invested back in April are probably pretty happy you did.
But for those of you who didn’t, there’s still a chance for some pretty large profits.
And while they won’t be as big as if you’d listened in April, they can still be life-changing if you act before more record numbers and major partnerships are announced...
New Revenues About to Hit
When I last wrote about the Alkaline Water Company (NASDAQ: WTER), it was about to branch out into a somewhat new segment.
It had already become one of the biggest and fastest-growing enhanced water brands in the country. And it was ready to add some more health and wellness products to its lineup.
So, it launched a line of ingestible CBD products to go with its CBD-infused hemp water. And the response has been phenomenal.
But none of those new sales have really shown up on an earnings report just yet. And when they do, it’s going to send shares flying.
Alkaline has a fiscal year that ends in March. Last year, it grew sales by about 30% to $41.14 million. In the first quarter of its new fiscal year, it brought in about 30% of last year’s sales.
And once those CBD revenues start hitting (which we’ll likely see the next time the company reports earnings in November), that’s going to grow a lot bigger.
But even if the CBD lineup didn’t add any sales, we’re still looking at annual revenues around $56.9 million. That’s a 40% increase.
And I can pretty much promise you that the CBD lineup will deliver a lot more than nothing.
But right now, the market isn’t discounting that into the price of the stock. It’s trading at a price-to-future sales level of 1.69 at the high end and closer to one at the low end.
And that’s not going to last. The average price-to-sales in this industry is closer to 6. And when this company starts trading at a more realistic multiple, you’re talking about shares worth close to $7 each.
Right now they’re sitting right around $1.50. That’ll work out to 350% gains from where the stock’s trading as I type this.
And it’s all but guaranteed to happen as soon as the company reports earnings in a few months.
But there are a couple more catalysts that might just hit the stock before those earnings come out. And they could add even more value to the shares.
What’s in Your Wallet Minibar?
You see, the company recently announced a partnership with Dot Foods, Inc.
You may not be familiar with that name, but it’s a really big one in the food distribution industry. Dot Foods is the largest food redistribution company in the U.S. Number two is a more familiar name: Sysco.
Dot has 4,300 customers that include hotels, restaurants (over 600,000 of them), and even schools and vending machines.
And the rumor is that Dot signed the deal with Alkaline Water Company because it was having issues with another massive client.
If that proves to be true, and AWC replaces the problem account, we’re talking about millions of products flooding into restaurants, vending machines, and hotel minibars across the country.
Of course, we’ll have to wait on an official announcement from the two companies, but my sources are usually pretty accurate, so I’m betting it’s a lock.
But there’s one more catalyst coming and my sources say it could be even bigger than the CBD sales and the Dot arrangement combined.
It’s All About Who Knows You
In the old days, if you wanted to reach millions of people with your ads and convince them to buy your products over those of others, your options were limited.
You could spend millions to run nationwide TV spots. You could spend millions to get ads in magazines and newspapers. Or you could spend millions getting big displays up in stores across the country.
But today, you’ve got so many more options. And one of the most effective is what we call “influencer campaigns.”
Influencers are people on social media with lots of followers. I’m talking tens of millions of people eagerly awaiting their every post.
Getting the right influencers on board is pretty much a sure bet to get your brand to the forefront of the public’s attention.
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If you can get Kim Kardashian West to start posting Instagram pictures of her enjoying your products, there are 187 million people who are going to see how much she’s loving your stuff.
Her sister, Kylie Jenner gets you 193 million more. Get Ariana Grande on board and you’ve got another 200.9 million people looking at your products and wondering if they should give them a try too.
The power of these accounts is truly awe-inspiring. Lyft has Snoop Dogg and his 51 million followers on board. And it gets about 6 million clicks and comments out of that each year.
Using food-focused influencers with follower counts only in the 175,000 range, Walmart was able to secure 86,000 likes and comments in a single month.
Now, not all of these engagements convert into sales, but those that do typically become repeat customers.
And those repeat customers become ambassadors for the brand as well, bringing more followers and more sales with them.
Now, my sources are telling me that Alkaline Water is working out a deal with some of the most influential of these influencers to become ambassadors for its brand.
And just the announcement of a deal and a few posts on Twitter and Instagram are likely to send shares soaring. I’m not even kidding when I say this announcement could spark a rally that ends with these shares worth $9–$10 each.
From where they are today, that’s a gain of 614% that would turn $1,000 into well over $7,000. And in just a few weeks’ time.
Nothing is set in stone here, and negotiations sometimes break down. But I’ve talked to the company, and it's very excited about the possibilities.
So, while it’s not a sure thing just yet, it’s about as sure as you can be at this point in the game.
This company has been trading well below its true value for a while now. But recent revenue growth is bringing attention from investors and share prices are starting to reflect the profitable future AWC has ahead of it.
But the market still hasn’t fully discounted the massive growth the company will see this year. And that’s created an incredible opportunity for investors.
You can buy these shares at a massive discount to where they’ll be trading a few months from now. And you can sit back and watch the gains come rolling in.
In a buyout scenario, I see someone paying at least seven times sales for this stock. At current sales levels, that’s about $6 a share. At future sales levels, that’s closer to $10 a share.
Either way, investing now is all but guaranteed to return you a pretty massive gain.
So, that’s my spiel for today. Like I promised, it’s short and to the point. You’ve got the facts. You know the catalysts I’m looking at. And you can choose to take action if you want.
Now, I’m going to go enjoy a much-needed and (I think) well-deserved long weekend. And I’ll be back next week refreshed and ready to give you more opportunities to grow your fortune.
To your wealth,
After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter, and co-authors The Wealth Advisory income stock newsletter. He also contributes regularly to Wealth Daily. To learn more about Jason, click here.
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