Sarasota, FL 4/2/2008 8:07:35 PM
Is their stock as healthy as their products? (CCBEF: OTCBB)
Pennycents Reports on Clearly Canadian Brands
Pennycents Magazine, the market’s most valuable research tool covering micro-cap, penny stocks and otcbb equities, issued the following daily column by Priya Nigam.
America's thirst for alternative beverages just keeps on growing. We are not only dealing with overweight adults, but an alarmingly high rate of child obesity. With rising awareness of this trend, there has been a conscious shift from soft drinks to dairy-based and energy-boosting alternative beverages. This consumption pattern is so profound that even companies like Coca-Cola and PepsiCo have taken huge strides to target health conscious consumers. The buzz word these days seems to be “organic” and the global organic foods industry has grown manifold over the past decade. In America, organic foods are fast becoming a part of the mainstream diet.
Against this backdrop, Vancouver-based Clearly Canadian Brands (CCBEF: OTCBB) is making good progress. The company markets premium alternative beverages, including Clearly Canadian® sparkling flavored waters and Clearly Canadian dailyEnergy, dailyVitamin and dailyHydration Natural Enhanced Waters. Last year, the company acquired DMR Food Corporation and My Organic Baby Inc, marking its debut into the healthy snacks and organic foods markets. While the acquisitions have led to product diversification, Clearly Canadian has undertaken various initiatives to improve its distribution network. Moreover, while the company is mainly focused on the US and Canadian markets, it caters to various other countries as well.
Clearly Canadian’s total revenues jumped 213% year-on-year in the fourth quarter to $3.34 million. Revenue growth was propelled by the two acquisitions in February and May 2007. Revenues for the year ended December 31, 2007 were up 48.9% at $11.1 million. Revenues from the company’s beverage division plummeted 25% in the year. CEO Bobby Genovese said, “We are very pleased to announce that for the first time in 10 plus years we are seeing revenues increase at Clearly Canadian Brands. This is a direct result of properly positioning the company in the rapidly expanding healthy food and beverage industry. We will continue to pursue opportunities to expand our footprint in this market. We now have consolidated all our operations in Toronto and have an infrastructure in place to take us above $30 million in revenues with minimal additional overhead costs.” Genovese added that the company had addressed the challenges being faced by the beverages division, which is now “well positioned to significantly increase revenues… in 2008 and beyond.”
Analyst Lisa Springer of Beacon Equity initiated coverage of Clearly Canadian in October last year with a speculative buy rating. In her note to clients, the analyst points out that the company enjoys strong brand recognition and has an aggressive marketing strategy. The note adds, “We expect the company to increase revenues substantially faster than the peer group over the next five years. Because of its superior growth prospects, we believe Clearly Canadian warrants a higher valuation than its peers.” (Shares are currently trading at $1.26, significantly short of their 52-week peak of $3.25.)
So, Clearly Canadian addresses a huge and growing market potential. The market for energy drinks and bottled water is expected to grow faster than the market for other beverages. Moreover, the organic and natural food market is likely to expand rapidly. The company has a sound marketing strategy in place and is growing organically and via acquisitions. Also, it has a fairly strong management team in place to execute its plans.
The writer does not own shares in the above stocks.
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