It's an odd thing to think of coconut water as being a viable large-scale business, but it seems very clear that it is. Vita Coco (COCO +0.66%) primarily sells coconut water in the U.S., as well as over 30 countries worldwide.
Investors have been handsomely rewarded for owning shares of Vita Coco. The stock has gained 55% year to date and 290% over the last five years. By comparison, the S&P 500 has gained about 16% this year. By all accounts, this has been a pretty great result for shareholders who saw the potential early.
Now, the question becomes: What do we need to watch for in order for this very positive story to continue?
Image source: Getty Images.
Room to run
According to market research available on Yahoo! Finance, the coconut water market is anticipated to increase from $4.43 billion in 2024 to $11.43 billion by 2030. This leaves a lot of room for Vita Coco to expand from its 2024 total revenues of $516 million. In all, the growth potential depends on how it contends with competitors, such as PepsiCo, Taste Nirvana, etc.
While it's hard to gauge exactly how each of these are performing in terms of market share year to year relative to the annual growth rate of the market, the expected scale of the market size seems promising for a key player like Vita Coco to keep growing. On this front, we're in good shape.
With the shares trading at nearly 47 times earnings, the fourth quarter and 2026 as a whole will be very important for this stock. To keep the company's current valuation rolling, Vita Coco has to keep maintaining its current growth rates.
The stock has enjoyed some serious momentum, which is why it's a trendy name right now. Vita Coco saw a net sales increase of 24% through the first three quarters of the year to $482 million. In the third quarter, net sales jumped by 37% to $182 million.
NASDAQ: COCO
Key Data Points
Looking ahead, Vita Coco is expecting full 2025 net sales in the range of $580 million, to $595 million. Furthermore, despite the impacts of tariffs, and increased costs of goods, Vita Coco expects gross margins to be 36% for the year.
These figures will be key for this stock to keep its run going. Not to be overly dramatic, but given its valuation of roughly 47 times earnings, Vita Coco has to keep these impressive percentage gains going into 2026 in order to maintain the stock's upward trajectory.
If things happen to slow down, Vita Coco stock might lose the momentum that has garnered the company so much praise.
