SodaStream Needs a Reason to Pop in 2014

SodaStream closes in on a fresh 52-week low.

Jan 7, 2014 at 8:48AM

This isn't the way SodaStream (NASDAQ:SODA) probably thought it would go. 

Shares of the company behind the namesake beverage system that transforms tap water into sparkling soda have closed lower in seven of the past nine trading days. At a time when market leaders are hitting fresh highs, SodaStream's stock closed yesterday within 6% of a fresh 52-week low.

It doesn't seem fair. SodaStream's handily beaten Wall Street's profit targets in its three most recent quarters. It's still a speedster. Expectations for the holiday quarter remain solid, with analysts targeting a 78% increase in earnings per share on a 29% top-line pop. 

Why has the stock been tumbling since rumors of a PepsiCo buyout seven months ago fizzled out? PepsiCo quickly shooting down the speculation didn't help -- and the chatter never really made sense -- but that should have only taken the stock down to where it was before the buzz began. 

Its most recent quarter did disappoint when it came to flavor sales. Revenue for its soda flavors rose a mere 7%, actually declining in the United States. However, even there, the 27% spike in soda makers and 34% surge in CO2 refills point to continuing popularity for the platform.  

SodaStream is cheap. The stock is now fetching less than 15 times this new year's projected profitability. It's growing faster than that, and that's with adoption rates continuing to improve across key geographical markets. 

Investors still somehow want SodaStream to prove itself, and there may be several ways for that to happen this year.

  • SodaStream can continue to blow past Wall Street's income estimates, meaning that the stock is now fetching a lot less than 15 times this year's eventual earnings.  
  • Fears of competitors storming the market have yet to pan out, and another year of vanquishing those demons will only widen SodaStream's lead. 
  • Accelerating growth in flavor sales would be a definite stock catalyst, and a big driver there may be the single-serve SodaCaps that rolled out stateside late last year. 
  • SodaStream has already lined up a murderers' row of beverage brands as flavor partners, but there's always room for more variety to validate the model and woo new customers.

There's probably more that can go right than wrong for SodaStream, but it's going to have to start hitting some of these mile markers if it wants to drive its way back to being a market darling.

Here's another stock that may "pop" this year
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Longtime Fool contributor Rick Munarriz owns shares of SodaStream. The Motley Fool recommends and owns shares of PepsiCo and SodaStream. 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 Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers