Jamba's (JMBA) smoothies may be fruity, but there's nothing fruity about Jamba as an investment.
Shares of the smoothie chain operator hit a three-year high last week, boosted by a bullish note out of Wedbush analyst Kurt Frederick.
Frederick -- who has an outperform rating on the company behind the 820-unit Jamba Juice chain -- sees profitability growing to $0.30 a share in three years. That may not seem like much, but it's a big deal for a retailer that is trading for a little more than $3 and just recently crossed over into profitability.
Worrywarts feared that Starbucks (SBUX -1.02%) and McDonald's (MCD -0.42%) starting to blend up smoothies would be hazardous to Jamba's health, but the exact opposite scenario has played out.
Same-store sales have been positive on a systemwide basis at Jamba for two years now. Starbucks introducing Vivanno five years ago, and acquiring the Evolution Fresh juice and smoothie chain two years ago hasn't hurt Jamba. McDonald's adding smoothies to McCafe three summers ago and offering small servings of blueberry pomegranate for just $1 late last week aren't hurting Jamba.
Jamba's growth hasn't been exactly spectacular. Revenue rose just 4% in its latest quarter, but margins are improving as now more than 500 of its 820 units are franchisee owned and operated.
Frederick is encouraged by the potential of the chain's push into juices and other food products as it builds on the success of repositioning Jamba as a wellness lifestyle brand.
We're now heading into the seasonally potent part of Jamba's operating calendar. Smoothie sales historically pick up during the warm spring and summer months.
Judging by the stock's share price, it's not just the smoothie sales that are picking up these days.
