SodaStream Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of home beverage carbonation system specialist SodaStream International (Nasdaq: SODA  ) climbed 11% in intraday trading Friday on above-average volume.

So what: The red-hot shares are setting yet another all-time high with the move and are now up a whopping 180% since going public in November. There doesn't seem to be any company-specific news driving today's double-digit pop, but given the fact that nearly half of SodaStream's shares are being shorted, we could simply be witnessing a "squeezing" effect of sorts.

Now what: I'd continue to keep my distance from SodaStream. The market for home soda makers may be a big one, but with the stock sporting a lofty forward P/E of 50, I'm just not ready to bet on any kind of mainstream acceptance just yet. Of course, given the wild success of Green Mountain's (Nasdaq: GMCR  ) Keurig maker -- and the wild returns that have followed -- the SodaStream story is most definitely worth following.

Interested in more info on SodaStream? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of and shorting Green Mountain. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (7) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On July 01, 2011, at 4:06 PM, TMFLifeIsGood wrote:

    Brian, I would rather be out front of the SODA story, than watching from the sidelines. If you believe that SODA will beat the market in the next 3 - 5 years (and I believe it will), "worth following"? More like worth owning in my book. The US just became there largest market. Lot's more to come.


  • Report this Comment On July 01, 2011, at 5:25 PM, martinitony wrote:

    Brian, the sales books for the second quarter closed yesterday. We may not know net income for a few weeks, but revenues are known by insiders this morning. This move is not a coincidence.

  • Report this Comment On July 01, 2011, at 6:53 PM, EquityBull wrote:

    I cannot invest knowing that it actually cost more to make soda at home with their product then just buying coke or pepsi in bottles. I may be wrong and miss the boat on this one but seems like consumers like to spend less. Also not sure they have any moat that can't be copied

  • Report this Comment On July 02, 2011, at 2:28 AM, motleypen wrote:

    Environmental responsibility? Think of all the fuel necessary to transport heavy water in soda. Even if it costs the same, it would still benefit the environment not to have to transport it. But, you could use the fizzed water to dilute sodas so the product is healthier and cheaper. You wouldn't need to schlepp the bottles home, and then recycle the empty bottles. You could learn to drink plain fizzed water which is much healthier. I have one and it's the best gadget I've invested in. I dilute one fourth Martinelli's to three fourths fizz. Serve it in a champagne glass and it has the festive bubbly feel and a quarter of the calories. Add slices of cucumber, lemon, lime and orange and you have bubbly spa water.

  • Report this Comment On July 02, 2011, at 4:02 AM, kalainovj wrote:

    May the Force be with you. Or at least that tickly carbonated feeling that tends to generate a wall vibrating belch. I concur with both Brian and Martini Tony. What we might be witnessing are the effects of a "perfect storm" generated by short squeeze and an exceptionally strong second quarter. It will definitely be interesting to see how this one plays out. My take: I drank SODA's carbonated koolaid awhile ago and purchased a few shares. Market fundamentals aside (i.e. P/E), I'm placing my money on SODA. I purchased a unit last fall before investing and found the darn thing is fun to use. My five year old is also a fan. Much like the early days of Green Mountain, SodaStream is actively marketing in venues such as BBBY, BJ's and Kohls. In my opinion the marketing scheme is working. Bottom line, this one is fun to watch.

  • Report this Comment On July 03, 2011, at 6:55 PM, alpineer wrote:

    My problem is that Sodastream main production facility is located in Mishor Edomim, an Israeli settlement built illegally in the Occupied Palestinian Territories. It's been a target of boycotts in many countries. And that's bound to continue.

    Much information contained in the 32-page report from the Coalition of Women for Peace - Israel: Sodastream - A case study for Corporate Activity in Illegal Israeli Settlements

    Google it.

  • Report this Comment On July 08, 2011, at 2:31 AM, ProGuildSocial wrote:

    Using Japanese Candlesticks combined with the T-line (8 EMA) I just bought some stock in SODA recently. I bought on technicals but also because I like the end product. I was up more than 30% in less than 2 weeks. Today (July 6th) SODA gapped up and turned into a bearish engulfment -- a clear sell signal -- it seems. Still it is above the T-line. (8ema)

    IBD says that leaders with strong institutional support -- that shoot up 20% or more in less than 3 weeks -- should be held, not sold because they may turn into Godzilla wins. SODA's institutional ownership has increased 60% in the last quarter so it seems to fit that description.

    I sold, but plan to buy it back again when profit taking is over -- which may be sooner than many think.. Who knows? I'll watch and react.

    Long term (6 month to 12 months), it looks to me like SODA will turn into a Godzilla like LULU, Amazon, and Apple did.

    I bought the SodaStream machine at BBBY and I love it. It's great because you can mix up your own sparkling drinks of various kinds. I enjoy adding sparkling water to Triple FX shots (healthy energy drinks from RBC Life Sciences.)

    SodaStream Penetration in the US is just starting. SodaStream reports that demand is increasing so fast they have decided to build a huge new factory.

    Their plans are not to compete with Coke or Pepsi, but they plan to get SODA stream into shops that have soda fountains and have SodaStream logos in place in these establishment.

    SodsStream caught my interest when it won a taste test against Coke on CNBC.

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