National Beverage Corp (AMEX: FIZ) - Grip It, Rip It and Add it to Your Portfolio.

This weekend I went searching for an opportunity in the NonCyclical/Beverages Non Alcoholic (.CBN) sector as it has seen plenty of institutional attention this year. Out of the 28 stocks in the sector, only one set up both technically and fundamentally for me. That company is National Beverage Corp and right now it provides a low risk entry point with a risk reward ration of almost 4 to 1.

National Beverage Corp (AMEX: FIZ) describes itself as a unique beverage company that produces energy drinks and powders, soft drinks, bottled waters, juices and juice products. FIZ highly recognized for a line of popular brands including Shasta, Faygo, Ritz, Everfresh, Mr. Pure, LaCroix, Rip It and PowerBlast™.

FIZ has three significant levels of resistant less than a dollar below the current price. I have out lined these three resistance levels above. The first is the 200Day SMA, followed by the long-term, up-trending line and the bottom at 11.75 back in mid June. My stop price is currently set just below all three of these resistance levels at $11.60 (about 6.5% risk).

The stock is currently oversold increasing the probability of a bounce here (See MACD, RSI and Full STO). The red line, nearly 20% above the current price, indicates my target price. As the 50Day SMA comes down, so will my target price however. This still sets up a good risk reward ratio (4:1).

Fundamentally, FIZ has a strong Debt/Equity Ratio, EPS Rank, Price Rank and Group Rank. I would like to see a stronger cash flow growth and relative P/E ratio but the positives outweigh the negatives here.

My only caution on FIZ is that it trades fairly light volume, averaging a brisk 163,000 shares/day. I typically prefer a little more volume than this but will make exceptions when I see charts set up well like this one here. It is going to take much stronger volume to sink FIZ through the 3 levels of resistance and down far enough to hit our stop price ($11.60). Good luck and happy trading!

Investor Term of the Day: ETF
Exchange Traded Fund. A fund that tracks an index but can be traded like a stock. These funds do not redeem any shares, and their shares prices are purely determined by supply and demand. The most well-known ETF is the SPDR, which tracks the S&P 500.

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UPDATE (Sept. 27, 2006): Today I bought FIZ at $11.70 and I have a stop at $11.47. If the stock is going to bounce it is going to do so right here, right now. Volume is starting to increase so expect the stock to move definitively in the next day or two here. Good luck!

UPDATE (Jan. 4, 2006): Stock continues to test the $14.00. Thus far we have seen decent gains since my recommendation back in Sept. The stock bounced as expected. Congrats to those who made money on this trade. Happy Trading!

2 Comments - Post your comment below.

Dr. Who
Sep. 25, 2006

I've also been looking at the sector and have found LBIX to be intriguing. Impressive year over year revenue, distributing agreement with HANS, and some products taking off. I'd love to hear your thoughts on this one. Peace.

Chad Lapa
Sep. 25, 2006

Hey Dr.,
I have not heard of LBIX until your mention but my initial impression of the stock is as follows; we have a base on top of base. Typically I do not like to see bases form on top of one another. When this happens I would recommend against buying shares until a breakout. Some stocks collapse before they finish a base and thus I wait patiently for the breakout (big upward price move on heavy volume) to prove itself.

The fundamentals of stock look strong with solid group and price rankings. I would expect the stock to continue to basing for another month or two before making any attempt at a breakout. Again, the sector looks good in terms of institutional cash flow but the stock trades low volume (like FIZ).

Another thing to keep in mind is that at the beginning of the year when the stock was trading at around $1.00. I am always a little cautious on run-ups this big. Its relationship with HANS can only be a positive but I would have to do more research before considering this one. In summary, be very cautious with this one. As promising as it looks, be weary of double bases and wait for the break out before putting your money on the line. Hope this helps friend.