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The Vita Coco Company (COCO - Free Report) , a Zacks Rank #1 (Strong Buy), is a leading producer of coconut water. The company develops, markets, and distributes coconut water products under the Vita Coco brand in Canada, Europe, the Middle East, the Asia Pacific region, as well as the United States.
Coconut water has been all the rage over the past several years, but the fact is this nutritious beverage has been around for centuries. Coconut water is a clear liquid found inside young coconuts that is packed with flavor and electrolytes.
Naturally loaded with potassium, magnesium, and phosphorus, you may have noticed some coconut water appears with a pink hue, which is due to higher levels of polyphenols and exposure to sunlight over time.
Vita Coco is part of the Zacks Beverages – Soft Drinks industry group, which currently ranks in the top 28% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Stocks within this industry group are also expected to experience above-average earnings growth. Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Vita Coco has managed to maintain a substantial market share, commanding over half of the coconut water market in the United States. In addition to coconut water, Vita Coco offers coconut oil and coconut milk; sparkling and purified water; plant-based energy drinks; protein-infused fitness drinks; and a hydration drink mix in powdered form. Vita Coco distributes its products through club, food, retail, drug, mass convenience, e-commerce, and foodservice channels.
The global coconut water market is projected to be worth nearly $12 billion by 2027, growing at a CAGR of 15.3% over the next several years. As a consumer shift to healthier products continues, the company is well-positioned to take advantage of this theme.
Vita Coco has also secured partnerships with major beverage companies. For example, the company’s partnership with Diageo led to the launch of Vita Coco Spiked with Captain Morgan, which serves as a prime example of its intent to broaden market reach.
Earnings Trends and Future Estimates
The producer of coconut water has established an impressive earnings history since its IPO in 2021. The company exceeded earnings estimates in each of the last six quarters. Back in May, Vita Coco posted first-quarter earnings of $0.24/share, a 26.3% surprise over the $0.19/share Zacks Consensus Estimate.
Vita Coco has delivered a trailing four-quarter average earnings surprise of 25.3%. Consistently beating earnings estimates is a recipe for success.
Analysts covering COCO are in agreement and have been raising their earnings estimates lately. For the current fiscal year, analysts increased earnings estimates by 9.47% in the past 60 days. The Zacks Consensus Estimate now stands at $1.04/share, reflecting potential growth of 40.5% relative to the prior year.
Image Source: Zacks Investment Research
Let’s Get Technical
COCO shares have surged nearly 40% over the past four months. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how the 50-day (blue line) moving average has begun to turn up, while the stock has regained both the 50-day and 200-day (red line) averages. The stock has also been making a series of higher highs. With both strong fundamental and technical indicators, Vita Coco is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Vita Coco has recently witnessed positive revisions. As long as this trend remains intact (and COCO continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
Vita Coco is ranked favorably by our Zacks Style Scores, with a best-in-class ‘A’ rating in our Growth category and a ‘B’ rating in our Momentum category. This indicates that COCO stock is likely to continue its strong momentum based on a favorable combination of earnings and sales growth.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why COCO stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture moving forward.
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Bull of the Day: Vita Coco (COCO)
The Vita Coco Company (COCO - Free Report) , a Zacks Rank #1 (Strong Buy), is a leading producer of coconut water. The company develops, markets, and distributes coconut water products under the Vita Coco brand in Canada, Europe, the Middle East, the Asia Pacific region, as well as the United States.
Coconut water has been all the rage over the past several years, but the fact is this nutritious beverage has been around for centuries. Coconut water is a clear liquid found inside young coconuts that is packed with flavor and electrolytes.
Naturally loaded with potassium, magnesium, and phosphorus, you may have noticed some coconut water appears with a pink hue, which is due to higher levels of polyphenols and exposure to sunlight over time.
Vita Coco is part of the Zacks Beverages – Soft Drinks industry group, which currently ranks in the top 28% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Stocks within this industry group are also expected to experience above-average earnings growth. Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Vita Coco has managed to maintain a substantial market share, commanding over half of the coconut water market in the United States. In addition to coconut water, Vita Coco offers coconut oil and coconut milk; sparkling and purified water; plant-based energy drinks; protein-infused fitness drinks; and a hydration drink mix in powdered form. Vita Coco distributes its products through club, food, retail, drug, mass convenience, e-commerce, and foodservice channels.
The global coconut water market is projected to be worth nearly $12 billion by 2027, growing at a CAGR of 15.3% over the next several years. As a consumer shift to healthier products continues, the company is well-positioned to take advantage of this theme.
Vita Coco has also secured partnerships with major beverage companies. For example, the company’s partnership with Diageo led to the launch of Vita Coco Spiked with Captain Morgan, which serves as a prime example of its intent to broaden market reach.
Earnings Trends and Future Estimates
The producer of coconut water has established an impressive earnings history since its IPO in 2021. The company exceeded earnings estimates in each of the last six quarters. Back in May, Vita Coco posted first-quarter earnings of $0.24/share, a 26.3% surprise over the $0.19/share Zacks Consensus Estimate.
Vita Coco has delivered a trailing four-quarter average earnings surprise of 25.3%. Consistently beating earnings estimates is a recipe for success.
Analysts covering COCO are in agreement and have been raising their earnings estimates lately. For the current fiscal year, analysts increased earnings estimates by 9.47% in the past 60 days. The Zacks Consensus Estimate now stands at $1.04/share, reflecting potential growth of 40.5% relative to the prior year.
Image Source: Zacks Investment Research
Let’s Get Technical
COCO shares have surged nearly 40% over the past four months. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how the 50-day (blue line) moving average has begun to turn up, while the stock has regained both the 50-day and 200-day (red line) averages. The stock has also been making a series of higher highs. With both strong fundamental and technical indicators, Vita Coco is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Vita Coco has recently witnessed positive revisions. As long as this trend remains intact (and COCO continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
Vita Coco is ranked favorably by our Zacks Style Scores, with a best-in-class ‘A’ rating in our Growth category and a ‘B’ rating in our Momentum category. This indicates that COCO stock is likely to continue its strong momentum based on a favorable combination of earnings and sales growth.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why COCO stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture moving forward.