Is Recent IPO Vita Coco a Good Stock to Buy?

Premium lifestyle beverage manufacturer The Vita Coco Company (COCO), which is known for its coconut water products, made its stock market debut on October 21, 2021. But even though the company’s profit margin has improved year-over-over-year, will COCO be able to maintain its growth streak as supply chain bottlenecks continue? Read more to find out.

 listing 11.50 million shares ,  43% of its customers ,  adjusted EBITDA ,  unable to stock shelves entirely ,  POWR Ratings

shutterstock.com – StockNews

The Vita Coco Company, Inc. (COCO), which is headquartered in New York City, is a healthy beverage producer known for its coconut water drinks. Founded in 2004, COCO’s popular brands include Vita Coco, Runa, and Ever & Ever. The company is a leading player in the premium lifestyle drink industry, operating in 24 countries worldwide. It controls 46% of the market share in the United States and more than 70% of the market share in the United Kingdom.

COCO made its stock market debut through a traditional IPO on October 21, 2021, by listing 11.50 million shares on the Nasdaq Stock Exchange. The stock made a lukewarm market debut, opening just 2.5% above its initial price of $15. 

But the shares COCO slumped 1.7% intraday to close its first trading session at $13.52. The stock has since gained 12.6% in price.

Here is what could influence COCO’s performance in the near term:

Growing Popularity

Vita Coco’s premium lifestyle products are a big hit among the Millennial and Gen Z consumers, with 43% of its customers belonging to these generations. The company recently launched Vita Coco Pressed, which represents more than 8% of the coconut water category. According to IRI Custom Research, COCO is the third-largest standalone brand in this category and is the second-fastest-growing brand among its peers.

Impressive Growth Story

For the trailing 12 months ended June 30, 2021, COCO’s net sales grew 17% year-over-year to $334 million. Its retail sales for the coconut water category grew 29% year-over-year over the 13 weeks ended September 5, 2021. Its net income for the six months ended June 2021 rose 43% from the same period last year to $9 million.

However, the company’s adjusted EBITDA fell 16% from the prior-year period to $16 million for the six months ended June 30, 2021, due primarily to supply chain headwinds.

Intense Competition

The rising demand for healthy, calorie-free alternatives to energy drinks and refreshing beverages has fueled COCO’s growth over the past few years. However, several competitors are steadily gaining traction in the highly-competitive beverage industry and will likely threaten COCO’s growth trajectory. The rising popularity of sparkling water drinks, such as La Croix, might impact the demand for COCO brands.

Supply Chain Bottlenecks

Surging shipping prices and delays in raw material and final product deliveries have affected COCO substantially; it has been unable to stock shelves entirely over the past 18 to 24 months. While the company’s long-standing contracts with its suppliers have allowed it to purchase its most important raw material, coconut, at a relatively reasonable price, surging inflation has increased costs in other production phases. As a result, COCO’s adjusted EBITDA declined in double digits year-over-year in the first half of 2021.

POWR Ratings Reflect Uncertainty

COCO has an overall C rating, which translates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a C grade for Value and Quality. In terms of forward non-GAAP PEG, COCO is currently trading at 2.1x, which is 20.7% lower than the 2.65 industry average. However, its 2.27 forward Price/Sales ratio is 53.3% higher than the 1.48 industry average. COCO’s mixed valuation metrics are in sync with its Value grade. In addition, its 31.48% trailing-12-month gross profit margin is 8.6% lower than the 34.43% industry average, which justifies its Quality grade.

Of the 36 stocks in the B-rated Beverages industry, COCO is ranked #36.

Beyond what we have stated above, one can view COCO Ratings for Momentum, Stability, Sentiment, and Growth here.

Bottom Line

COCO’s IPO is expected to accelerate its growth prospects over the long term because the company has been developing ancillary healthy beverages to expand its market reach. However, given current supply chain constraints and inflationary pressures, COCO’s profit margins might fall slightly in the near term. Thus, we think investors should wait until the supply chain issues get resolved, and COCO’s adjusted EBITDA margin improves, before investing in the stock.

How Does the Vita Coco Company (COCO) Stack Up Against its Peers?

While COCO has a C rating in our proprietary rating system, one might want to consider taking a look at its industry peers, Coca-Cola Consolidated, Inc. (COKE) and Suntory Beverage & Food Ltd (STBFY), which have an A (Strong Buy) rating.


COCO shares fell $0.21 (-1.38%) in premarket trading Monday. Year-to-date, COCO has gained 12.57%, versus a 23.96% rise in the benchmark S&P 500 index during the same period.



About the Author: Aditi Ganguly


 listing 11.50 million shares ,  43% of its customers ,  adjusted EBITDA ,  unable to stock shelves entirely ,  POWR Ratings

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.

More…

The post Is Recent IPO Vita Coco a Good Stock to Buy? appeared first on StockNews.com

News Related

OTHER NEWS

25 Ways You Can Turn a One-Time Buyer Into a Repeat Buyer

If you are a business owner, you want customers to keep coming back. Customers who make repeat purchases lower the costs that your company incurs for marketing and advertising. With ... Read more »

The Dos and Don'ts of Dealing With Consumers in the Digital Space

As consumers today, we know what we want and we are willing to pay for this control. In the past decade, digital transformation has greatly accelerated the pace and scope ... Read more »

Find Ways to Compete When Margins Are Razor-Thin

Figuring out how to operate profitably in a market against more profitable competitors offering similar products or services is no easy task. Charge too much and you risk losing potential ... Read more »

The Strategies I Used to Sell Two Business by the Time I was 45

Growing up, I watched my dad run his own business and I had a front-row seat to the freedom and opportunity that gave him. But before jumping feet-first into the ... Read more »

6 Things You Can Do Today That Will Have a Huge Impact on Your Business

There are so many things in business that you cannot control. You have no say on when a global pandemic will shut down the economy. You don’t get to set ... Read more »

Putin will never have another chance like this to overthrow the European strategic order

Vladimir Putin Ukraine Russia European Union Markets seem not to believe that Europe is close to the largest military conflict since 1945, even though the US president tells us that ... Read more »

10 Deals on Apple Products and Accessories

Apple is well-known for being a pioneer in tech. And while Apple makes many useful products for entrepreneurs, they aren’t exactly for the frugal-minded. However, if you’re willing to buy ... Read more »

This Female-Founded Company Has Improved Stock Photography

In a crowded marketplace, it can be difficult to make your business stand out. That’s where great design comes in. Well-designed marketing campaigns, product pages, and other materials can help ... Read more »

Peltz's Activist Fund Trian Is Said to Build Stake in Unilever

(Bloomberg) — Nelson Peltz’s activist hedge fund Trian Fund Management has built a stake in Unilever Plc, according to people familiar with the matter, adding pressure on Chief Executive Officer ... Read more »

Retail Resolve, Credit Form a Stock Bull Case for Troubled Times

Retail Resolve, Credit Form a Stock Bull Case for Troubled Times (Bloomberg) — Fortitude among small-time traders and sanguine credit signals underlie what’s left of the stock bull case as ... Read more »

U.S. Stocks Historically Deliver Strong Gains in Fed Hike Cycles

U.S. Stocks Historically Deliver Strong Gains in Fed Hike Cycles (Bloomberg) — As the Nasdaq 100 comes off its worst week since the pandemic selloff in March 2020, investors now ... Read more »

HSBC adds pronouns to staff name badges

HSBC pronoun transgender name badge woke HSBC has started putting pronouns on branch workers' name badges as banks across Britain race to appear more inclusive. Branch staff can for the ... Read more »

For Goldman, Saudi Arabia Will Remain King of Mideast IPO Deals

(Bloomberg) — Saudi Arabia will remain the busiest of the Middle East’s stock markets, even as the United Arab Emirates pushes more companies to go public, according to Goldman Sachs ... Read more »

Germany's Lufthansa in talks to buy 40% stake in Italy's ITA Airways - sources

1 / 2Germany’s Lufthansa in talks to buy 40% stake in Italy’s ITA Airways – sourcesFILE PHOTO: Frankfurt’s airport during COVID-19 By Michael Nienaber and Giuseppe Fonte BERLIN/ROME (Reuters) – ... Read more »

Digital payment sector wants MDR to be back

The digital payment sector is seeking reintroduction of MDR (merchant discount rate) charges in the union budget as the absence of it is crippling the homegrown payment service providers while ... Read more »

It's time for US small businesses to offer a four-day workweek

Every small business owner I talk to has the same problem: we can’t find enough people to do the work we need. Well, I have an answer: perhaps we should ... Read more »

Saudi's State-Controlled Miner Names Fourth CEO in Two Years

(Bloomberg) — Saudi Arabia’s state-controlled miner has named its fourth chief executive officer in the past two years after replacing Abdulaziz Al-Harbi. Most Read from Bloomberg Robert Wilt, a former ... Read more »

S. Korea decides to offer US$250 mln in low-interest loans for Egypt's railway project

SEOUL, Jan. 23 (Yonhap) — The state-run Export-Import Bank of Korea said Sunday it has decided to offer US$250 million in low-interest loans to support Egypt’s national railway modernization project. ... Read more »

British Blue Chips Keep U.K. Political Drama in the Background

1 / 3British Blue Chips Keep U.K. Political Drama in the Background (Bloomberg) — While Boris Johnson’s premiership is in turmoil, the country’s stock market has shrugged off the political ... Read more »

What Would War in Ukraine Mean for Europe's Energy Crisis?

1 / 3What Would War in Ukraine Mean for Europe’s Energy Crisis? (Bloomberg) — How hard will energy-starved Europe be hit by a potential Russian invasion of Ukraine? It depends ... Read more »

Recovery stocks: the IAG vs Rolls-Royce share price rated

pensive bearded business man sitting on chair looking out of the window There are two stocks in the FTSE 100 that look to me to be some of the top ... Read more »

Goldman Sees Risk Fed Will Tighten at Every Meeting From March

1 / 2Goldman Sees Risk Fed Will Tighten at Every Meeting From March (Bloomberg) — Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our ... Read more »

NCLAT directs NCLT to decide over SREI's plea against rights issue of Trinity Alternative Investment

The National Company Law Appellate Tribunal (NCLAT) has asked the Kolkata bench of NCLT to decide over the plea of SREI Infrastructure Finance against the rights issue of its subsidiary ... Read more »

Lamborghini to Bid Farewell to Pure Combustion Cars This Year

1 / 2Lamborghini to Bid Farewell to Pure Combustion Cars This Year (Bloomberg) — Lamborghini is gearing up for the final lap of combustion engines powering coveted models like the ... Read more »

French Nuclear Giant's Fall Risks Energy Security for All Europe

1 / 4French Nuclear Giant’s Fall Risks Energy Security for All Europe (Bloomberg) — The long decline of Electricite de France SA isn’t only a political crisis for the government ... Read more »

Woori, Shinhan chiefs pledge to achieve customer centricity

 Woori Bank CEO Kwon Kwang-seok speaks at the firm’s 2022 business strategy meeting held online and on the metaverse, Friday. (Woori Bank)Chiefs of South Korea’s Woori Bank and Shinhan Bank ... Read more »

Saudi Fund's Digital Security Firm Seeks $820 Million From IPO

(Bloomberg) — Elm Co., a digital security firm owned by Saudi Arabia’s sovereign wealth fund, is seeking to raise as much $820 million from an IPO as the kingdom pushes ... Read more »

Exports of red pepper paste surge 63% in 4 years on K-pop popularity

Spicy braised tofu (dubu jorim) (Korean Bapsang)South Korean exports of red pepper paste soared nearly 63 percent in the past four years thanks to the global popularity of Korean pop ... Read more »

Some Predictions for How the Metaverse Will Impact Our Lives

The change of Facebook’s name to Meta came as a bit of a shock to the world. However, the keynote given by Mark Zuckerberg demonstrates that Facebook is expanding beyond ... Read more »

Ether, Solana, Memecoins Get Crushed in Crypto Market Rout

1 / 3Ether, Solana, Memecoins Get Crushed in Crypto Market Rout (Bloomberg) — The risk-off attitude and selling pressure across the global crypto market showed no sign of abating on ... Read more »

Living With Covid Proving Tough for a Gridlocked World Economy

1 / 3Living With Covid Proving Tough for a Gridlocked World Economy (Bloomberg) — The surging omicron variant is complicating the recovery for a world economy that continues to be ... Read more »

Treasury Yield-Curve Mavens Are Pining for Guidance From Fed

1 / 2Treasury Yield-Curve Mavens Are Pining for Guidance From Fed (Bloomberg) — Bond traders who’ve built careers on anticipating how Federal Reserve policy shifts will play out for short- ... Read more »

Fed Seen Taking a Step Toward March Rate Increase: Eco Week

1 / 7Fed Seen Taking a Step Toward March Rate Increase: Eco Week (Bloomberg) — Jerome Powell and his fellow Federal Reserve policy makers are expected to signal their first ... Read more »

Morgan Stanley Strategist Who Called China Rout Still Won't Buy

(Bloomberg) — Jonathan Garner is a notable holdout in a market where an increasing number of strategists have turned bullish on Chinese stocks. Most Read from Bloomberg Having warned about ... Read more »

Morgan Stanley's Slimmon Warns Against Buying Growth-Stock Dip

(Bloomberg) — Investors should avoid the temptation to buy the dips in expensive high-growth stocks because “once the fever breaks, it lasts a long time,” according to Andrew Slimmon, senior ... Read more »

8 Bulletproof Ways of Turning a Startup Into a Thriving Business

Living off of your great business idea: that’s the dream, right? And if you’ve got a dream market concept, you’ve already completed the first step. Of course, getting to success ... Read more »

Turkey Said to See Inflation Rate Peaking at About 40% in 2022

(Bloomberg) — Turkish Finance Minister Nureddin Nebati told economists he expects the inflation rate to peak at about 40% in the months ahead and not to surpass 50% this year, ... Read more »

Positive Thoughts + Positive Actions = Positive Results

“The power of positive thinking” has been a catchphrase among myriad motivational speakers, from Socrates to Tony Robbins to Dr. Norman Vincent Peale, a Methodist preacher best known for his ... Read more »

5 Golden Benefits of PR

Public relations is a common buzz-phrase in business language today, but too few industry professionals actually grasp its true meaning, and how to make it reap maximum benefits. First and ... Read more »

Regaining Control of Your Sleep Life...From a (Recovering) Insomniac Entrepreneur

Entrepreneurship goes hand-in-hand with a lot of things. Determination. Dreaming big. An embrace of failure and risk. And, in my personal experience: insomnia.  I’ve found this is especially true for ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic