In this article we covered 5 small-cap beverage stocks with long-term upside potential. You can read our detailed coverage as well as a more comprehensive list here at 10 small-cap beverage stocks to consider:
5) Zevia Pbc (NYSE:ZVIA)
Market Cap: $316 Million
Number of Hedge Funds Having Stakes in the Company: 7
Zevia Pbc (NYSE:ZVIA), which went public last year, makes soda, energy drinks, organic tea, mixers, sparkling water and beverage products for kids. In June, Zevia Pbc (NYSE:ZVIA) announced leadership changes. Analysts believe the new management can hasten the company’s path to profitability. From 2008 to 2021, Zevia’s top-line jumped 47% on a compounded basis. Zevia Pbc (NYSE:ZVIA) has a solid gross margin in the mid-40s range. In the first quarter, the company saw a 40% rise in production costs as aluminum prices and supply-chain issues hit the results. These short-term issues are expected to be resolved in the coming months.
Zevia Pbc (NYSE:ZVIA) is focusing more on natural sweeteners like Stevia to lure health-conscious customers. However, the company still has to do a lot to resolve its competition and cost issues. Despite the risks, Zevia Pbc (NYSE:ZVIA) remains a decent small-cap beverage stock to consider.
4) Alto Ingredients Inc (NASDAQ:ALTO)
Market Cap: $283 Million
Number of Hedge Funds Having Stakes in the Company: 11
California-based Alto Ingredients Inc (NASDAQ:ALTO) is tapping into a diverse range of market segments in the beverage industry. Alto Ingredients Inc (NASDAQ:ALTO) makes specialty alcohols used in healthcare items; grain neutral spirits used in alcoholic beverages; and corn germ used in corn oils and carbon dioxide for food and beverage markets.
Alto Ingredients Inc (NASDAQ:ALTO) is one of the largest producers of specialty alcohol in the US, with an annual alcohol production capacity of 350 million gallons, as of the end of last year. Alto Ingredients Inc (NASDAQ:ALTO) is taking several measures to increase its profitability and curb volatility. One such measure is the company’s plan to cut natural gas consumption at its plants. Alto Ingredients Inc (NASDAQ:ALTO) saw an improvement in its revenue and income last year. Between 2017 and 2019, the company’s net loss swelled to $90.2 million from $36.2 million, before narrowing to $16.4 million in 2020 and eventually turning into a profit of $44.2 million in 2021. At a PE ratio of 5.6 (as of September 15), ALTO is one of the best small-cap beverage stocks to consider.
3) Splash Beverage Group Inc (NYSEAMERICAN:SBEV)
Market Cap: $75.3 Million
Number of Hedge Funds Having Stakes in the Company: 3
Splash Beverage Group Inc (SBEV)’s main focus is the lucrative tequila market, which is expected to reach a value of $15.6 billion by 2029. The Florida-based company sells flavored tequilas under the SALT Naturally Flavored Tequila brand. The company also makes all natural sports drinks and wine. SBEV’s sports drink brand TapouT avoids artificial flavors and includes only natural ingredients. The company last month announced that it received approval to sell TapouT in certain Target stores across the country. Splash Beverage Group Inc (SBEV) recently announced that Central Distributors of Las Vegas will now distribute its SALT Tequila brand across Nevada. It also announced agreements with Maryland-based Carey Distributors and Wantz Distributors. Splash’s SALT brand has a strong distribution with Walmart and Total Wine. The brand was a success in Mexico, which led the company to launch SALT in more South American countries.
Splash Beverage also announced that its single serve wine, Copa Di Vino, will be available in Love’s Travel Center’s Texas locations. In the first quarter, Splash Beverage Group Inc (SBEV)’s sales jumped by 86% to $2.45 million.
Splash Beverage Group Inc (SBEV) has an edge over its competitors due to its ecommerce initiatives. Its vertically integrated B2B and B2C e-commerce distribution platform named Qplash sells products on Amazon and Shopify stores.
While some analysts are skeptical of the stock because of its high cash-burn rate and declining margins, the company believes its marketing initiatives and acquisitions will bear fruit. In June, Splash Beverage Group Inc (SBEV) said it acquired 80% of Pulpoloco Sangria, a Spanish beverage company. The deal would give Splash control over the manufacturing and distribution of Pulpoloco across the US.
