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BOSTON (TheStreet) --Coca-Cola (KO) , PepsiCo (PEP) and Dr. Pepper Snapple Groupundefined have nothing on soft-drink maker National Beverage (FIZZ) .

The pint-sized company, with a market value of only $579 million, offers impressive fundamentals. But, unlike many smaller firms, it's committed to shareholder returns. In December, National Beverage declared a $2.30 cash dividend, equal to a 17% distribution yield on declaration, to ensure that its stockholders would benefit from preferential dividend-tax treatment amid congressional uncertainty.

In 2009, National Beverage paid a $1.35 dividend, equal to a yield over 11% on declaration date. The Fort Lauderdale, Fla.-based company doesn't enjoy much name recognition, with brands ranging from



Crystal Bay

, but its business is well-managed and there is reason to expect further dividends, given its debt-free balance sheet.

National Beverage is a peripheral beverage player. It's focused on the health-conscious U.S. consumer, selling energy drinks, fortified powders and enhanced juice and water. It has 12 manufacturing facilities in major urban centers. It distributes products through supermarkets, convenience stores, restaurants, schools, hospitals and wholesale clubs. Its geographic focus and efficient network has elevated the company to the fourth-largest U.S. carbonated-drink seller.

The company's strategy has yielded strong fundamentals. For example, the gross and operating profit margins, at 39% and more than 10%, respectively, are reasonable, in light of National Beverage's secondary-brand status. However, Coke, Pepsi and Dr. Pepper have superior profit spreads.

Coke, Gross: 69%, Operating: 19%
Pepsi, Gross: 58%, Operating: 14%
Dr. Pepper, Gross: 62%, Operating: 19%

The larger beverage manufacturers also have fast-growing emerging-markets units. Still, in the performance category, National Beverage has delivered. Its stock has gained 20% a year, on average, since 2008, besting Coke's 3.3% annualized return, Pepsi's 3.3% annualized loss and Dr. Pepper's 5% annualized increase. In the case of soda stocks, bigger isn't necessarily better. Other top performers include



, which has rallied 54% a year, on average, since 2008, and


( HANS), which has climbed 10% annually.

Jones Soda


, down 36% a year, has doubled in the past 12 months as earnings stretched 8.3%.

Similar to the craft-beer movement, there may be a craft-soda movement afoot. Hip consumers enjoy regional brands such as those offered by National, throwbacks like Cott's

RC Cola

, and unique flavors like the green-apple and blue-bubble gum tonics of Jones Soda.

Although all of the small-cap pop purveyors are attractive for idiosyncratic reasons, National's lofty special dividends, consistent stock performance and discount valuation make it a compelling play for 2011. Also, it's still flying under the radar, with only one major sell-side brokerage,

Stifel Financial

, covering the stock, which receives a "hold" ranking.

National Beverage sells for a trailing earnings multiple of 16, a forward earnings multiple of 14, a book value multiple of 3.5, a sales multiple of 1 and a cash flow multiple of 9.8, 10%, 16%, 27%, 74% and 28% discounts to beverage peer averages. Its PEG ratio, calculated by dividing the stock's trailing P/E by researchers' long-term terminal earnings growth forecast, of 0.8 demonstrates a 20% discount to estimated fair value. Growth is solid.

Since 2008, National Beverage has boosted sales, net income and earnings per share 2.9%, 17% and 17%, annually, on average. Over that span, its profitability metrics have improved, with return on equity rising from 14% in the fiscal second-quarter of 2009 to 15% in last year's fiscal second quarter and 22% in the recently reported period. Return on assets expanded from 11% to 14% in the latest quarter. With growing book value and exposure to consumer non-discretionary spending, this is a stock to consider as risks elevate in U.S. markets. The Fed's quantitative easing is slated to end in June and, following the conclusion of the first round, a risk-off trade coincided with the relative outperformance of defensive plays. National Beverage is a stock to keep an eye on.

Its subsidiaries bottle store-brand soda, as well, and bulk offerings at stores such as






, might regain appeal as energy costs are on the rise and unemployment remains elevated. A heightened level of consumer confidence, evident in the recent two-year high in the

Bloomberg Consumer Comfort Index

, is causing many to question the sustainability of optimism, with so many economic structural headwinds still blowing.

-- Written by Jake Lynch in Boston.


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