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3 Predictions for SodaStream in 2013

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There are finally signs of fizzy life at SodaStream (NASDAQ: SODA  ) . After closing in the $30s in eight of the past nine quarters, shares of the company behind the popular carbonated beverage maker are starting to move. SodaStream's stock rose just 4% in 2011, its first complete year of trading since going public in late 2010. The stock is trading 29% higher so far in 2012.

What about 2013? Well, you came to the right place. I have a crystal ball -- a Crystal Pepsi ball, if you will -- and there are a few things I see happening with SodaStream in 2013.

1. SodaStream will close higher in 2013
How many people dismissed SodaStream as a fad when it went public at $20? How many are willing to eat crow -- and wash it down with some SodaStream pop -- now that the shares have more than doubled?

Faddishness accusations are subjective, but data is not. SodaStream closed out its latest quarter selling 941,000 soda maker kits, 4.3 million carbonator refills, and 7.7 million syrup bottles. Those are records in all three categories, and the fact that carbonators and flavors are at all-time highs proves that folks are actually using their systems. They aren't collecting dust in the attic alongside the Foreman grill and Margaritaville cocktail maker.

Being a success isn't enough to warrant a higher share price. Check out Crocs (NASDAQ: CROX  ) . The resin footwear maker is another company that mistakenly gets labeled as a fad. Crocs sales have been growing every year, topping $1 billion in revenue last year. Analysts see modest double-digit percentage growth this year and again in 2013.

So why is the stock trading 82% off its all-time high established five years ago? Well, growth has slowed, expectations have been tempered, and operations have stumbled. There have been inventory hiccups in the past, and Crocs recently hosed down its growth target given weakness overseas.

In other words, SodaStream won't have to merely keep growing to keep its share price moving higher in the year ahead. That's practically a given, and rolling out a Super Bowl ad in early February will educate even more consumers about the product's environmental, freshness, and convenience advantages. SodaStream will need to make sure margins play along if it wants to keep its recent momentum going in 2013.

Spoiler alert: It will.

2. SodaStream will beat Wall Street's profit estimates in at least three of the next four quarters
One way SodaStream will make sure its stock remains bubbly is by blowing past the prognosticators. SodaStream has made a sport of this in its brief publicly traded life, as the Israeli-based pop star has beaten analyst estimates in each and every quarter since its IPO. Turning that 7-for-7 streak into 11-for-11 a year from now will be a challenge since Wall Street is starting to catch up to the company, but it's hard to bet against the trend.

Here's a quick stroll down memory lane to see how well the past year has gone for SodaStream.


EPS Estimate



Q4 2011




Q1 2012




Q2 2012




Q3 2012




Source: Thomson Reuters.

My call here is that SodaStream will land ahead of analyst profit targets in at least three of the next four quarters, and that will go a long way toward securing that the first prediction holds up as well.

3. There won't be a material competitive threat to SodaStream
This year will end with a bit of a cliffhanger. After SodaStream seemingly vanquished Primo Water's (NASDAQ: PRMW  ) Flavorstation, the platform got a new lease on life when Cuisinart stepped up with a deal that will incorporate Primo Water's technology its new home-based soda maker.

Primo Water didn't have too many connections outside its bottled-water distributors, but Cuisinart obviously comes with a bigger network in lining up retail distribution. However, SodaStream is full of historical anecdotes on what has happened in other countries when new entrants try to crash the party. More often than not, the rivals end up helping SodaStream sales by educating the market before taking a back seat to SodaStream's dominance.

Besides, SodaStream's reach grows with every passing quarter. It also has some surprisingly seasoned partners on the flavor end of the spectrum. Kraft Foods (UNKNOWN: KRFT.DL  ) introduced its Country Time and Crystal Light brands as SodaStream co-branded syrups this summer. Campbell Soup (NYSE: CPB  ) announced a deal last month to license Campbell's V8 Splash and V8 V-Fusion brands for SodaStream.

Let Cuisinart and any others come. SodaStream won't be dethroned in 2013.

Drink up
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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10/24/2016 4:00 PM
SODA $24.34 Up +0.30 +1.25%
SodaStream CAPS Rating: **
CPB $53.13 Down -0.18 -0.34%
Campbell Soup CAPS Rating: ***
CROX $7.88 Up +0.02 +0.25%
Crocs CAPS Rating: **
KRFT.DL $0.00 Down +0.00 +0.00%
Kraft Foods CAPS Rating: *****
PRMW $13.81 Down -0.03 -0.22%
Primo Water CAPS Rating: *