The Alkaline Water Company Inc

The Alkaline Water Company Inc. (NASDAQ: WTER) offers bottled alkaline water to retail consumers. The company's goods are available in 500-milliliter, 700-milliliter, 1-liter, 1.5-liter, 2-liter, 3-liter, and 1-gallon quantities. Alkaline88, the company's flagship product, is created using an electrolysis technique that employs electronic cells covered with a variety of earth minerals to generate 8.8 pH drinking water without the need for any synthetic chemicals.

Key Highlights

• On May 9, 2022, Alkaline Water Company Inc. announced the completion of its public offering of 8,333,334 shares of common stock at a price of USD 0.60 per share. Before underwriting discounts, commissions, and offering charges, the gross proceeds of the offering were around USD 5 million.
• On May 10, 2022, The Alkaline Water Company Inc. announced that as part of a special summer promotion, the country's leading pharmacy chain will distribute the Alkaline88 1-Liter 12 pack. The 12-pack is now available at many of the drugstore chain's locations around the country, and it will be accessible in about 8,000 total chain locations throughout the summer. 
• The Company reported sales of about USD 15.1 million for the fiscal third quarter ending December 31, 2021, a 57 percent increase over the prior year's quarter and the second-best period in the Company's history.
• Gross profit for the fiscal third quarter was USD 5 million, up 48 percent from USD 3.4 million the year before, with total operating costs of USD 15.9 million, up from USD 7.6 million the year before.
• The third quarter's net loss was 10.7 million dollars (USD 0.10) per share, compared to USD 4.4 million dollars (USD 0.06) per share in the third quarter of fiscal 2021. Non-cash expenses of around (USD 0.03) per share influenced the net loss and net loss per share in the quarter ended December 31, 2021. Sales have been strong, but the firm, like practically everyone else, has faced severe margin erosion due to inflationary pressures in the previous year.
• Cash consumed by operations for the nine months ended December 31, 2021, was about USD 25.9 million, up from USD 9.6 million for the nine months ended December 31, 2020, with a cash position of USD 3.3 million at the end of the third quarter fiscal 2022.
• WTER stock is in the downward trend since making 52 weeks high of USD 2.35 in August last year. The current price is below both the short-term (50-day) SMA and long-term(200-day) SMA, with many retests and failures of the 50-day SMA as can be seen in the chart below. The current price is around 30% below the IPO price of USD 0.60. Currently, the RSI is oversold with a level of 17.53. While considering a longer-term time frame, the price is currently in a major demand area of USD 0.40-USD 0.50.

Stock Recommendation

WTER's stock price has fallen 72.57% in the past six months and is currently leaning toward the lower end of its 52-week range of USD 0.40 to USD 2.35. Currently, the stock is trading in steep bearish zone. Once stock moves above USD 0.52 level,  and RSI above 40, then stock could be considered for the upside movement.

Given the stock's considerable bearish price movement over the past six months, financial results, and technical analysis, we recommend a "Watch" rating on the stock at its current price of USD 0.42, up 2.08% as of 13 May 2022, at 12:20 PM PDT.

One-year technical Price Chart (as of 13 May 2022, at 12:20 PM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Current price as of May 13, 2022, at 12:20 PM PDT.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.