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American Water
Star (AMEX: AMW): Wal-Mart Reorders Suggest Robust Sales |
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I've been expecting American Water
Star to get out some disclosure on the results from their initial deliveries
to Wal-Mart. As it turns out, the initial sales results of their
Hawaiian
Tropic sugar-free, carb free, caffeine free, and sodium-free tropical
drink are outstanding.
The news release came out just after
today's closing bell. The initial shipments of 73 truckloads sold far better
than expected, and Wal-Mart has already begun placing reorders.
I know from the emails I have received
that many of you went into your local Wal-Mart Superstore and were
frustrated when you weren't able to locate the product or the free samples
which were to be distributed.
As it turns out, the beverage was
not consistently placed in the same location in all 1208 stores. In addition,
the initial orders had, for the most part, already sold through by the
time the demonstrations got rolling. There is no point in having the demonstration
if you don't have product to sell, which is why many of you might not have
found the Hawaiian Tropic Beverage as easily as expected.
Today's disclosure reveals that Wal-Mart
has already begun reordering to replenish depleted supplies. As it turns
out, Hawaiian Tropic is the number one selling beverage in the newly
created low-carb section of the stores. Chairman Roger Muhlman states:
| “Due to the success
of faster than expected turn over sales of our Hawaiian Tropic line of
low carb beverages in the Wal-Mart Supercenter Stores we have been and
will continue to ship reorders immediately,” stated Roger Muhlman, CEO
of American Water Star, Inc. |
More importantly, steps are now being
taken to make the Hawaiian Tropic beverage a staple in the Wal-Mart
Superstores. According to the press release, American Water Star
is working on integrating the EDI partnership software replenishment system
which the Wal-Mart Superstores use.
The EDI system, once integrated,
is automated software which automatically reorders product as inventory
sells. The software tracks sales at the point of purchase. Once certain
inventory depletion thresholds are hit, the software automatically generates
purchase orders to replenish supplies. This system eliminates a great deal
of paperwork, and allows vendors like American Water Star to consistently
keep product on the shelves.
AMW hopes to have the EDI
system integrated with Wal-Mart over the next few weeks. From there, consistent
supplies of beverage should be in the stores, and if beverage continues
to sell AMW should deliver stellar corporate performance.
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Upside
Potential |
 |
As you can see from the chart, AMW
has stabilized just above $1 since the stock succumbed to the selling pressure
exerted from the short sighted financiers who owned it at $.90. The decline
in the stock price can be directly attributed to their shares becoming
free trading. Last week's blip above $1.25 occurred when American
Water announced it had successfully made the jump to the American Stock
Exchange.
With the technical damage behind
us, we can now look at the value and upside potential. Management at the
company is convinced the Wal-Mart relationship could eventually translate
into $100 million in annual sales. While there are no guarantees,
the early returns suggest this is a strong possiblilty.
I expect the company to continue
to expand its distribution network to other grocery store chains. In addition,
bottling capacity and additional beverage lines are being added in the
near future. This will help them accelerate the process of achieving the
$100
million annual revenue target.
If AMW can reach the $100
million mark, a moderate 2x annual sales valuation would but the stock
at $2.66, which should be at the low end of the valuation scale.
If the stock gets hot, a much more vibrant number could be in the cross
hairs. Now that the company has jumped to the American Stock Exchange,
the audience is considerably expanded, thereby giving us a better chance
for a strong valuation.
Investors should continue to accumulate
this stock for a major move above current levels. There could be some supply
remaining, but the stock clearly has no propensity to trade below $1, making
the risk at these levels minimal. In short- investors should continue to
accumulate for a major move either later this year or early in 2005.
Here is the complete text of today's
news release for your review:
| Press Release Source:
American Water Star Inc.
Wal-Mart Supercenter Stores Issue
Reorders for American Water Star Inc. Beverages
Thursday June 24, 4:05
pm ET
LAS VEGAS--(BUSINESS
WIRE)--June 24, 2004--American Water Star Inc. (AMEX: AMW - News), a publicly
traded company, located in Las Vegas, is proud to announce that product
reorders have been received from Wal-Mart Supercenter Stores.
"Due to the success of
faster than expected turnover sales of our Hawaiian Tropic line of low
carb beverages in the Wal-Mart Supercenter Stores we have been and will
continue to ship reorders immediately," stated Roger Mohlman, CEO of American
Water Star Inc. "Due to the large number of telephone calls and e-mails
from stockholders and customers inquiring about where and when to find
the product in the Wal-Mart Supercenter Stores we would like you to know
that more beverage is on the way. The beverage has sold out much faster
than expected and reorders have been received and trucks are being shipped
weekly. Therefore we want our customers to know that Wal-Mart Supercenter
Stores have ordered replenishment of beverages for all their stores and
will maintain an inventory going forward."
AMW and Wal-Mart Supercenter
Stores have the ability to initiate the EDI partnership software replenishment
system currently being tested at this time. AMW hopes to have this completed
in a few weeks.
About American Water
Star Inc.
American Water Star Inc.
("AMW") is a publicly traded company, and is engaged in the beverage bottling
industry. Its product brands are both licensed and developed in-house,
and bottled in strategic locations throughout the United States. AMW's
beverage products are sold by the truckload, principally to distributors,
who sell to retail stores, corner grocery stores, convenience stores, schools
and other outlets.
At AMW, we believe our
great-tasting, new zero sugar, zero calorie flavored water beverages have
positioned us to capture a large share of the market for healthy flavored
waters. Our products include: Hawaiian Tropic -- our latest product featuring
a sugar-free, no carbonation, and caffeine-free, sodium-free tropical drink.
Hawaiian Tropic flavors include Strawberry Kiwi, Kiwi-Lemon Lime, Orange
Guava and Pineapple Pink Grapefruit. For the grade school age children
we are introducing Geyser Sport -- our new non-sugared, 0 calorie, 0 carbohydrates,
0 sodium, vitamin and mineral-enriched, fruit-flavored beverage brand.
Our other premium beverages include: Geyser Fruit Beverages -- our line
of eight different fruit-flavored waters which have proven to be popular
with consumers, and Geyser Fruta -- our Latin line of seven different fruit-flavored
beverages.
Statements herein express
management's beliefs and expectations regarding future performance and
are forward looking and involve risks and uncertainties, including, but
not limited to, the ability to negotiate outstanding prior debts of acquired
companies; properly identify acquisition partners; adequately perform due
diligence; manage and integrate acquired businesses; raise working capital
and secure other financing; respond to competition and rapidly changing
technology; deal with market and stock price fluctuations; and other risks.
These risks are and will be detailed, from time to time, in AMW's Securities
and Exchange Commission filings, including Form 10-KSB for the year ended
Dec. 31, 2003, and subsequent Forms 10-QSB and 8-K. Actual results may
differ materially from management's expectations.
--------------------------------------------------------------------------------
Contact:
American Water Star Inc., Las Vegas
Donald Hejmanowski, 702-740-7036
or
Redwood Consultants, LLC
Jens Dalsgaard, 415-884-0348
--------------------------------------------------------------------------------
Source: American Water
Star Inc. |
Charts Provided Courtesy
Of TradePortal.com |
