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SodaStream Dips for All the Wrong Reasons

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SodaStream (NASDAQ: SODA  ) has been fizzy lately, though today investors are feeling a little flat.

A bearish article in Barron's this morning and Bed Bath & Beyond's (NASDAQ: BBBY  ) disappointing quarterly report last night are weighing on the company behind the popular carbonated beverage maker system, according to Investors Business Daily.

The knocks aren't entirely fair.

Why should weak bottom-line guidance at Bed Bath & Beyond weigh on SodaStream? It's not like this is 2010 when the house wares retailer was one of the few places where one could get a SodaStream system or swap out CO2 cylinders. Weakness at the superstore chain also doesn't mean that any single category is coming under fire.

Bed Bath & Beyond sells far more coffee brewers than it does soda makers, but Green Mountain Coffee Roasters (UNKNOWN: GMCR.DL  ) -- a company that too many investors mistakenly staple to the hip of SodaStream itself -- is actually moving higher today.

That leaves us with the Barron's Ahead of the Crown column today, deliciously asking, "Is SodaStream Getting Frothy?" as its headline.

The article begins by pointing out that 60% of the stock's float is actually sold short. Does that seem frothy? If anything, it indicates that the bears are the ones foaming at the mouth, here. The healthy short interest may actually be fueling the recent rally as a short squeeze kicks in.

The article also points out that SodaStream is fetching 21 times this year's projected earnings. That may make it a "pricey stock," but keep in mind that the company is actually growing faster than its earnings multiple. Oh, and let's not forget that 2013 is just a few days away, and SodaStream shares are trading for less than 17 times forward earnings.

The shorts will always be around. They see SodaStream as a fad, despite the company's most recent quarter where it hit new records in all three categories by selling 941,000 soda maker kits, 4.3 million CO2 refills, and 7.7 million syrup bottles.

SodaStream is one of this year's most misunderstood growth stocks. Good luck betting against it.

Drink up
SodaStream is blazing as consumer-facing growth stock, and it's just the kind of stock that legendary investor Peter Lynch used to single out before his peers caught on. A new report singles out three millionaire-maker stocks in the same mold. SodaStream isn't one of them, but the free report should open up a few opportunities for you to consider. Click here to check it out now. 

SodaStream's carbonation technology sounds simple, right? Well, this razor-and-blade company offers an intriguing opportunity for growth that may be harder to duplicate than you might think. Our premium report on SodaStream explains the opportunities as well as the risks in the company. The report comes with a year's worth of updates, so just click here to get started.

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Related Tickers

10/21/2016 4:00 PM
SODA $24.04 Up +0.09 +0.38%
SodaStream CAPS Rating: **
BBBY $40.45 Up +0.15 +0.37%
Bed Bath and Beyon… CAPS Rating: ***
GMCR.DL $0.00 Down +0.00 +0.00%
Keurig Green Mount… CAPS Rating: **