Beverage Stock Hoping to Pop Next Week

FIZZ is ripe for a short squeeze

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National Beverage Corp. (NASDAQ:FIZZ) is an American beverage developer, manufacturer, and distributor of flavored soft drinks. On Thursday, Sept. 9, the company will release its fiscal first-quarter earnings report. Ahead of the event, options traders are prepping for a bigger-than-expected move.

All four of FIZZ's most recent post-earnings reactions have been to the negative, including a 8% bear gap back in March. Overall, the stock averages a post-earnings move of 4.4%, regardless of direction, in the last eight quarters. This time around, the  options market is pricing in a post-earnings move of 8.6%.

National Beverage stock is up 10% in 2021, and 22% in the last 12 months. However, the shares have traded in a tight range all summer, with their 200-day moving average putting a lid on any rallies since early July.

FIZZ Chart

What's intriguing about FIZZ is its short squeeze potential. A whopping 26.7% of the stock's total available float is sold short. At the equity's average pace of trading, it would take shorts 19 days to buy back their bearish bets.

FIZZ also trades at a high price-earnings ratio of 25.26 and has a similar forward price-earnings ratio of 24.94, which reflects the beverage company’s slow-paced growth. However, National Beverage has not been able to stay consistent with its top- and bottom-line growth over the past few years, experiencing a decrease in annual revenue for fiscal 2020, as well as back-to-back years of net income declines for fiscal 2019 and fiscal 2020. Since fiscal 2018, FIZZ's revenues and net income have only increased 10% and 16%, respectively.

The most promising fundamental feature of National Beverage Corporation is its balance sheet, which holds $194 million in cash and $44 million in total debt. The potential upside for FIZZ is limited despite the stock being down over 50% from its highs. In general, potential investors will want to hold off for a price under $36 in order to get a price-earnings ratio under 20 before investing in National Beverage stock.

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