Leading Brands (LBIX) Signs Deal With China

Vancouver-based healthy beverage distributor Leading Brands (LBIX, $2.02, up $0.33) surged 19.52% after the company said that it signed an agreement to supply 500 milliliter bottles and 5 liter WaterBoxes of its HappyWater bottled water to a significant customer in China. Happy Water is a natural alkaline blend sourced from the Halcyon Spring and the Mount Woodside Spring in the Canadian mountains of British Columbia. The water is advertised as having a pH of 7.4, which is ideal for the body, and contains natural minerals and electrolytes. The first shipment is expected in third quarter.

Besides HappyWater, the $5.77 million company sells brands TrueBlue, PureBlue, TrueBlack, and Canada FreshAir, and distributes its beverages in Canada, the western United States, and Asia. On June 14, the company reported 1st quarter earnings per share (EPS) of C$0.10 on C$2.85 million in revenue, compared to EPS of -C$0.15 on C$3.20 million in revenue a year ago. Gross margin rose to 38.7% compared to 31.1% a year ago. HappyWater sales jumped 38%. In the 2nd quarter 2015, the company had EPS of C$0.07 on C$3.78 million in revenue. For full year fiscal 2015, the company had EPS of -C$0.45 on C$11.01 million in revenue, compared to EPS of C$0.04 on C$13.86 million in revenue a year ago. The only analyst following the company gives the stock a 1-year price target of $4.40. The stock has no trailing PE, no forward PE, price/sales of 0.69, and a current ratio of 1.56. Short interest is 0.05%, which means that short sellers probably do not think the stock will fall much.