When the up and down motion of the sea takes it’s toll on fishermen, the wise charter captain will break out the ginger. History has shown us that ginger is very settling to the stomach, and often saves an expensive cruise or fishing trip from turning into a nightmare. So, it’s no wonder that we would suggest you take a look at Reed’s Inc. (REED.OB) Not only could their signature ginger brew save your vacation, their stock could save your portfolio.
While it’s true that Reed’s makes an all natural Ginger drink that has become their signature, it’s just one of the 15 different types of beverages it’s marketing. Granted the ginger brews carries a lot of weight, since it’s been a medicinal miracle down through the ages. The Chinese prescribed ginger root for all manner of health related problems and even today scientists are discovering that in addition to combating sea sickness, Ginger helps with such problem situations as digestion, blood pressure, arthritis, and even cancer relief! Recent releases from the University of Michigan suggest that Ginger’s anti inflammatory profile is helping patients defeat ovarian cancer.
So, what does a company do that’s already offering up to 6 naturally flavored ginger brews, each a health drink with such notable health benefits? It expands it’s reach to even more consumers who are looking for alternatives to the standard cola type soft drinks. Coined “new age” drinks by some, these include all natural healthy alternatives to standard cola fare. One of the best sellers is China Cola.
China Cola is so unique that it should be on a shelf by itself. Take a true cola, the recipe having been borne of a true cola brewmaster from years ago, and then mix in a Chinese herbal medicine bag, so that along with tasting great, your soft drink will have health benefits. Can it get any better than that? No. With the population’s explosive demand for energy drinks, China Cola provides taste, energy boost, and the health benefits of years of Chinese apothacary. That’s a potent mix!
Is softdrink the only avenue that Reed’s has taken? Oh no, not at all. But of course when you are beginning to dominate the all natural, new age beverage market, offerings like their Virgils all natural root beer which is designed from the start to be the finest root beer on the planet, or their Virgils Black cherry creme soda, also made from the finest ingredients, it’s impossible to top. I’ve always had a saying in my life, “I’ve never been disappointed with the best” and Reed’s only uses the best of the best ingredients. So, it’s natural to think that their soft drinks are “all there is”. Well that’s not true. They have created ginger hard candy, a ginger chewy candy and a ginger based Ice cream also. This company will be found making products that make sense, are in demand, and sell well.
Okay, so we like their products. What makes us think they can go further? When REED first IPO’d back in December of 2006 we just knewthat with the other small label soft drink makers seeing their stock prices go parabolic, that REED.OB would too. All we needed to do was wait for the inevitable IPO chop to subside and it would be discovered. Trading started on December 29 at the 4 dollar level and chopped it’s way sideways for a few months. But then, just as we suggested it would do, it caught the attention of some more analysts and soon it was “off to the races”. By August it had surpassed the 10 dollar mark, before fading off in some well deserved profit taking.
Unlike so many small companies that sound right but aren’t much more than fluff, REED is doing everything right. Sales in the alternative drink market have exploded and REED has been right there, taking advantage of the demand. REED’s sales rose almost 11% last year, and they used the Proceeds from the IPO to expand their sales and distribution ability for this year. By the March quarter of this year, sales had grown an incredible 52% year over year! With that type of sales growth, coupled with the CEO’s desire to expand into even wider markets, REED is on track to become profitable in the very near future.
Lets look at this, as an example. All Star distributing is probably the largest most well known beer distributor in Pennsylvania. They realized that the non alcoholic beverage market is growing so fast that they needed to be in it, and whom did they select? That’s right, REED. With partnerships like that becoming comonplace, REED’s own company estimates are for growth of 20 to 40% this year, and I’m confident they’ll come in at almost the high end of that range.
Here’s the bottom line. Many people turn on the tap water and are horrified at what comes out. It smells of chemicals and leaves water spots that are so nasty, some have to use a commercial cleaner to get rid of them. So, most people have gone into the alternative drink direction. I’m not alone obviously as you cannot walk a crowded street without seeing someone carrying a bottle of water, an energy drink and now hopefully a Reed’s Rootbeer or ginger concoction. We think that they are doing the right things, at the right time to capitalize on the whole “green and healthy” revolution that we’re going through, as evidenced by the tremendous success of places such as Wholefoods. They’ve begun to really show up in major publications such as Every Day with Rachel Ray-November 2007 ,Yahoo Food-October 2007, Better Nutrition-September 2007 , Blue Print-September 2007Diet and Nutrition-September 2007, Better Nutrition- September 2007, Washington Post-August 2007 ,First for Women-August 2007 Etc etc. This company is getting noticed by all the right people now.
This is a great story, a great company and it’s beginning to look like a really great stock. Don’t be surprised if one day in the not so distant future you see this thing trading in the 30’s and have to say “wow, I was there at the beginning”.
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