Stocks for Coca-Cola to Buy: Primo Water (PRMW)
An outside candidate as a 2017 acquisition by Coca-Cola is Primo Water Corporation (NASDAQ:PRMW). With a market capitalization of $314 million, Coca-Cola would easily be able to complete this deal and would get a strengthened position in bottled water.
Primo Water made an acquisition recently that will transform the company. Primo paid $273 million to acquire Glacier Water. The deal will more than double net sales, operating income and customer locations for Primo Water with minimal overlap.
Primo Water reported a record quarter for revenue and profitability, which should get the attention of investors and other beverage companies. Third-quarter revenue increased 5% to $35.5 million. The sell thru of dispenser units increased 13% in the quarter.
Primo Water is North America’s largest single source provider of multi-gallon purified bottle water and self-service refill water. Thanks to the strong quarter, PRMW raised its full-year revenue guidance to a range of $133.2 to $134.4 million.
This marked the 18th consecutive quarter of 8.5% or higher same store unit growth for the company. The chain added 300 net retail customers, including many Wal-Mart Stores, Inc. (NYSE:WMT). The buyout of Glacier will take Primo Water to more than 46,000 customers. An annual target is to add 1,500 to 2,000 customers a year, taking Primo to what they believe is their long term goal of 50,000 to 60,000 locations.
Primo Water makes money selling large amounts of water to customers. The company has some of its own water brands and major deals with businesses and retail companies. A buyout by Coca-Cola could help KO expand some other brands into offices and businesses. Imagine offices being able to buy large water cooler refills and also some bottled drinks for employees.
As of this writing, Chris Katje did not hold a position in any of the aforementioned securities.