New Age Beverages (NASDAQ:NBEV) isn't an easy company to pin down.

Over the last year, the company has morphed from a sleepy seller of alternative beverages like kombucha to a hot play on the CBD market as it unveiled a portfolio of branded beverages featuring the popular cannabis derivative. Since that move a year ago, New Age has doubled down on growth, merging last December with Morinda. The latter is best known for its exposure to the Chinese market through its Tahitian Noni Juice, which makes up 90% of its sales and will bring New Age an additional $240 million in annual revenue.

In June, the company followed up that move with an acquisition of Brands Within Reach, a marketing company that owns the licensing and distribution rights for popular beverage brands like Volvic, Nestea, Evian, and Illy. That move is expected to add $15 million in annual revenue to New Age.

A can of Marley Mate with slices of fruit.

Image source: New Age Beverages.

The upshot of those acquisitions, particularly Morinda, has been skyrocketing revenue growth for New Age: The top line jumped 397% to $66.3 million. Sequential revenue growth was up only 14%, indicating that the vast majority of that surge was due to the December purchase of Morinda.

New Age's stock has gone for a ride over the last year. Shares initially surged more than 300% when the company announced plans to get into CBD beverages. But New Age has not yet released its line of CBD beverages due to regulatory uncertainty, and the stock has fallen in recent months as that promise has withered. The chart below shows the stock's performance since last September.

NBEV Chart

NBEV data by YCharts.

Where will New Age Beverages be in five years? That will largely depend on two factors: the regulatory environment for CBD (and whether CBD beverages become popular) and whether the company can capitalize on its recent acquisitions and grow its other alternative beverages. Let's take a look at each of these factors.

The CBD environment

Since New Age first said it would unveil a new line of CBD beverages last September, the company's promise to break into the potentially lucrative market has been largely unfulfilled. A year later, New Age is still not selling any CBD beverages in the U.S., though it is selling CBD topicals here in its home country. In its most recent earnings call, the company blamed murky guidance from the FDA and confusion on the overall regulatory environment, saying it's had commitments from retailers for nearly a year now and is awaiting the go-ahead to launch.

CBD beverage production remains the primary investing thesis for the company, but in addition to regulatory uncertainty, it's also unclear what the long-term demand is for such products.

For now, the steady march to marijuana legalization in the U.S. has been on hold. Efforts to legalize marijuana in New York and New Jersey, two of the most populous states in the country, have mostly stalled out. Though Canada legalized pot nearly a year ago, the issue has largely been ignored in the current U.S. presidential election, meaning the potential for Canada's move to set a trend and carry over to the U.S. has probably passed.

Though cannabis may eventually be fully legalized in the U.S., that could be 5, 10, or even 30 years away, and that matters to investors. Making bets that assume near-term legalization is risky.

Similarly, the future of CBD demand is also uncertain -- the product may prove to be a fad. Its rise has sparked a considerable amount of skepticism from the medical community, and though the product has caught a trend, it's unclear whether its growth will persist.

Furthermore, beverage giants like Coca-Cola and PepsiCo would likely capitalize on CBD if the component became fully legal and proved to have lasting popularity. They could even introduce their own namesake beverages with CBD. On the other hand, legalization of CBD could make a company like New Age an attractive acquisition target for a larger company like Coke or Pepsi, as both companies have a history of swallowing smaller brands in fast-growing niches of the beverage industry.

Alternative beverages

The safer and more predictable growth avenue for New Age seems to be in alternative beverages like kombucha, mate, iced tea and coffee, and energy drinks. It's clear that the global beverage industry is moving away from sugary beverages like sodas and to alternative, healthier drinks like coconut water, seltzer, and the product categories that comprise New Age's lineup.

Its acquisition of Morinda and Brands Within Reach shows the company's ambition, and brands like Nestea and Volvic could play well in New Age's hands. However, the company's ability to grow its own in-house brands has been modest at best, as New Age was generating less than $100 million in revenue a year before the Morinda deal. CEO Brent Wells said the company was on track for "good organic growth" in the second half of the year, and it saw 7% organic growth from the New Age group in the second quarter. That's a solid clip but probably not fast enough to justify New Age's valuation.

In other words, New Age will have to fulfill its promise either through CBD beverages or through acquisitions. What the company can accomplish with brands like Volvic and Nestea will be an important test and should provide more information for investors for what to expect from the company over the long term.

A long-term speculative play

The best-case scenario for New Age five years from now remains as a speculative play on CBD and CBD beverages. Putting aside the regulatory obstacles, the company faces risks like competition from the entrenched beverage giants and a possible shift in consumer tastes, since the durability of CBD demand still seems questionable.

New Age could also grow through acquisitions, as it seems likely that the company will aim to take over more beverage brands. But the most likely scenario is that New Age will still be a minor beverage company five years from now, as this is a difficult industry to break into.

At today's price, the upside potential might be enough to entice more than a few risk-seeking investors, and the stock's volatility is likely to continue on any CBD news, but fundamentals alone aren't enough to justify owning the stock. We'll learn more if and when the hurdles for CBD beverage distribution disappear, but even that may not show the potential market that New Age and its investors are counting on.