• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Today, I'm Drowning in WTER

Alkaline Water Company is making me look all wet. But, still, I see good things flowing downstream.
By TIMOTHY COLLINS
Nov 17, 2020 | 01:52 PM EST
Stocks quotes in this article: WTER

I feel like the market has taken to accentuating my wrongs more than my rights as of late. Maybe it is because so many of the recent moves have been huge ones, and we tend to notice losers more than winners in our portfolio. Still, it doesn't make those days feel any better when you "notice" that loser.
 
Sometimes, it simply won't let itself go unnoticed. That's the case for me Tuesday with the Alkaline Water Company ( WTER) . After speaking with the company, I came away with a pretty good feeling. There's a lot of new products, it appeared to have picked up momentum from Covid with big potential for long-term consumers rather than just panic buyers from the spring, and the entire cannabidiol, or CBD, market waits to be harvested. While those things may remain the case with lots of good things ahead, the second-quarter earnings weren't anything that is going to excite investors. Maybe more challenging for bulls is the guidance for the remainder of the year may not look quite as strong at first glance as it should probably be perceived.
 
The second quarter saw revenue of $10.76 million with a loss of $0.06 per share, a far cry from Wall Street's $14.55 million revenue consensus. The earnings per share number also came up four cents short. The first quarter saw benefits from Covid, giving the company $25 million in revenue for the first half of the year, representing growth of 21%. For the second half of the year, management anticipates revenue of $23 million to $27 million, providing a midpoint equal to the first half of the year. There should be some optimism in this number, given it is similar to the first six months of the year, without the benefit of a Covid bump. Granted, the consensus for the year was $58.63 million, so even after removing this quarter's nearly $4 million miss, the full year guide is still lower by roughly $5 million compared to consensus.
 
Either Wall Street is off with its models, or the company needs to do a better job communicating expectations for growth and revenue. Small caps and microcaps, especially those in growth mode, can't afford to be 10% or 20% below consensus forecasts. Unfortunately, after talking with the company, my takeaway was growth would be in the mid-20% range for the current fiscal year with the potential to see a tick higher next year with the CBD lines showing strong growth. Guidance for growth of 17% to 27% for the remainder of this year call that into question. WTER needs to perform at the high-end of the range, something we simply haven't seen.
 
With all that said, this is still a long-term thesis for me. I'm not looking for a quick pop this week, this month, or even this year. My thinking is rooted in the CBD category growth that we won't see until calendar year 2021 and 2022, with an eye on the company eventually be being bought in calendar year 2022. If the company grows revenue by 25% for the remainder of fiscal 2021, fiscal 2022, and the first half of fiscal 2023, it will put revenue in the $75 million to $80 million range by the summer of 2022 (I hate when fiscal years don't match calendar years). That's the sweet spot for beverage buyouts.
 
I have added to my position, but not aggressively yet. I want to see how the market reacts over the next few days. Although my long-term thesis remains intact, there's no denying my entry was early, poorly timed, and wrong. No excuses. That one is on me.
 
And in this market, I can say unequivocally, it hurts.
 
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Timothy Collins was long WTER.

TAGS: Investing | Options | Stocks | Utilities

More from Stocks

Corrective Action Produces Fading Confidence and Technical Damage

James "Rev Shark" DePorre
Feb 26, 2021 5:08 PM EST

It's dangerous to have too much exposure now, but the potential for a good recovery is there once interest rate issues are digested.

I'm Intrigued by the Recent Pullback in Aurora Mobile

Timothy Collins
Feb 26, 2021 3:30 PM EST

While the Chinese company is still not profitable, it is cash flow positive.

Salesforce Gets a Quant Downgrade on Top of Weakening Charts

Bruce Kamich
Feb 26, 2021 12:50 PM EST

Here's what investors and traders need to think about.

My Preference Right Now Is to Buy Pre-Deals

Timothy Collins
Feb 26, 2021 12:36 PM EST

I've added a few names that I see as a great risk-reward because of the limited downside.

I've Been a Buyer Friday, Making Partial Buys Like I Always Do

James "Rev Shark" DePorre
Feb 26, 2021 12:07 PM EST

It's premature to predict that a low has been made, but plenty of stocks are quite washed-out already and are starting to find support.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • 12:31 PM EST GARY BERMAN

    Has the Short-Term Top Come for the XLF/Banks?

    The has triggered a long-term overbought signal ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login