Thirsty for Holiday Profits? Grab a SODA
This truly is the year of the broken IPO. Sodastream priced its IPO at ~$30/ share and climbed up to a high of $80. Right now it is hovering at its IPO price from a year ago. Sound familiar? Does LinkedIn ring a bell? How about Pandora? Or Zillow? You get the point. The shorts are out there looking for fresh meat to hunt and shoot down IPOs from extreme valuations. Since Sodastream has succumbed to the shorts and settled down, is now the time to put money at work?
I think Sodastream has potential in the short term. It got slaughtered because it beat Q2 earnings but never raised guidance. Fair? Maybe. In Q3, it beat by 65% and raised yearly guidance. Not much happened after a quick spike up. Fair? Not quite. The company has proved to be profitable (which not many IPOs in 2011 can claim). Each quarter has been better than the last in 2011, with Q3 reaching bro status. SODA is establishing a consistent reputation of blowing out analyst estimates.
SODA has some great growth potential in the future and has many reasons to steadily climb higher. Firstly, its products have only reached 0.5% of U.S. households. Secondly, Wal-Mart is expected to begin selling Sodastream in its stores in the new year. Trader Joe’s and the almighty Whole Foods are in the pipeline, as well. That's a mega large and mega mainstream customer expansion opportunity which may equate to mega profits. SODA has great growth potential and hasn’t come close to realizing its full potential. The company is only starting to see the beginning of its international success with connections in Japan and Europe gaining ground. Heck, Sodastream will even be made available in Brazil in 1Q 2012.
Before picking up shares, however, I have to ask myself one simple question. Do I want to own a soda making machine? Answer: nope. No thanks. Sodastream says, “Turn water into fresh sparkling water and soda.” Unless it turns water into Guinness with the snap of a finger, I’ll pass. I’ll just go buy 2 liters of Mountain Dew for a $1 at Wal-Mart. At least then I know I’m getting legit sugary goodness. Have you ever gotten a birthday gift that you never use? Sodastream products are like the snow cone machine that just sits in your closet all year. Fads are fads, and fads go away. This fad could fizzle away once the novelty of it wears off. I was at the mall over Black Friday weekend and I saw something surprising. Soccer moms that savage shopping centers leaving devastation in its wake seemed to miss picking up this product. The shelves were full of cola making kits from SODA. If you’re thinking about buying SODA, go to Sears and ask the sales reps how Sodastream has been selling in their stores.
I’m bullish on Sodastream, based on current price ($32) and potential growth. But the product doesn’t excite me. If I don’t want to own the product, why should I believe in the stock? There are other opportunities out there where I can have greater conviction for the same fundamental reasons to buy. Then again, you can't make the big bucks without taking on some risk. If you like the product, now may be a good time to sip on some SODA.
Disclosure: None.
***Information on this site is for informational and entertainment purposes only and is not to be considered as a solicitation or recommendation. The authors do not guarantee the accuracy of any of the information presented on this site. Investing can be extremely risky.The authors of this site are not connected with the financial industry and nothing here should be construed as giving financial advice. The authors may and often will own the stocks they pick. The authors give no guarantee of the accuracy, truthfulness, candor, precision, sureness, strictness, definitude, legitimacy, verity, reliability, completeness, veracity or preciseness of any information presented and in no way are the authors responsible for any damages or loses incurred by using information contained in the site.*****
I think Sodastream has potential in the short term. It got slaughtered because it beat Q2 earnings but never raised guidance. Fair? Maybe. In Q3, it beat by 65% and raised yearly guidance. Not much happened after a quick spike up. Fair? Not quite. The company has proved to be profitable (which not many IPOs in 2011 can claim). Each quarter has been better than the last in 2011, with Q3 reaching bro status. SODA is establishing a consistent reputation of blowing out analyst estimates.
SODA has some great growth potential in the future and has many reasons to steadily climb higher. Firstly, its products have only reached 0.5% of U.S. households. Secondly, Wal-Mart is expected to begin selling Sodastream in its stores in the new year. Trader Joe’s and the almighty Whole Foods are in the pipeline, as well. That's a mega large and mega mainstream customer expansion opportunity which may equate to mega profits. SODA has great growth potential and hasn’t come close to realizing its full potential. The company is only starting to see the beginning of its international success with connections in Japan and Europe gaining ground. Heck, Sodastream will even be made available in Brazil in 1Q 2012.
Before picking up shares, however, I have to ask myself one simple question. Do I want to own a soda making machine? Answer: nope. No thanks. Sodastream says, “Turn water into fresh sparkling water and soda.” Unless it turns water into Guinness with the snap of a finger, I’ll pass. I’ll just go buy 2 liters of Mountain Dew for a $1 at Wal-Mart. At least then I know I’m getting legit sugary goodness. Have you ever gotten a birthday gift that you never use? Sodastream products are like the snow cone machine that just sits in your closet all year. Fads are fads, and fads go away. This fad could fizzle away once the novelty of it wears off. I was at the mall over Black Friday weekend and I saw something surprising. Soccer moms that savage shopping centers leaving devastation in its wake seemed to miss picking up this product. The shelves were full of cola making kits from SODA. If you’re thinking about buying SODA, go to Sears and ask the sales reps how Sodastream has been selling in their stores.
I’m bullish on Sodastream, based on current price ($32) and potential growth. But the product doesn’t excite me. If I don’t want to own the product, why should I believe in the stock? There are other opportunities out there where I can have greater conviction for the same fundamental reasons to buy. Then again, you can't make the big bucks without taking on some risk. If you like the product, now may be a good time to sip on some SODA.
Disclosure: None.
***Information on this site is for informational and entertainment purposes only and is not to be considered as a solicitation or recommendation. The authors do not guarantee the accuracy of any of the information presented on this site. Investing can be extremely risky.The authors of this site are not connected with the financial industry and nothing here should be construed as giving financial advice. The authors may and often will own the stocks they pick. The authors give no guarantee of the accuracy, truthfulness, candor, precision, sureness, strictness, definitude, legitimacy, verity, reliability, completeness, veracity or preciseness of any information presented and in no way are the authors responsible for any damages or loses incurred by using information contained in the site.*****
