SodaStream Pops on a New Radar

An analyst initiates coverage of SodaStream.

Jan 9, 2014 at 1:46PM

SodaStream (NASDAQ:SODA) has a new believer. 

KeyBanc Capital Markets initiated coverage of the company behind the namesake appliances that turn tap water into sparkling soda with a bullish buy rating yesterday, sending the stock 4% higher. KeyBanc analyst Akshay Jagdale has established a $70 price target on the shares, representing a healthy 39% of upside beyond yesterday's close. 

It's certainly a timely recommendation. SodaStream has lost a lot of fizz since peaking at $77.80 last June. The stock went on to close lower in five of the final six months of 2013. 

SodaStream's fundamentals haven't followed the stock south. Growth continues, and that finds the shares trading at historically low multiples. SodaStream can be had for just 15 times this year's projected earnings, and you won't find too many consumer-facing companies trading at similar multiples growing faster than SodaStream. Analysts see revenue and earnings climbing 18% and 29%, respectively, in 2014.

This may not seem to be an ideal time to corner the market when it comes to home-based beverage carbonation. Soda has come under fire for childhood obesity risks, and even some of the sweeteners used in diet drinks may prove harmful. 

However, it's against this backdrop that SodaStream offers a platform that is convenient, more environmentally friendly than traditional pop, and just flat-out fun.

A viable rival has yet to spring up domestically. SodaStream faces competition in some of its more established European markets, but even there the presence has actually benefited SodaStream by validating the niche.

Jagdale's bullish call this week should pan out. Whether we can credit the current buying opportunity to acquisition rumors that didn't bear fruit or slowing growth of its flavor bottles in its latest quarter, this is a rare opportunity to pick up a game-changing consumer stock at a discount to its growth rate.

Not everyone sees it that way, naturally. Oppenheimer, Stifel, and Deutsche Bank -- three of the underwriters that helped take SodaStream public at $20 in 2010 -- downgraded the stock at various points last year. There are also 8.5 million shares sold short, which is at the high end of its range over the past year. However, coming in fresh by initiating coverage as Jagdale is doing this week warrants a fresh look at a company that is far from perfect but also too cheap to ignore.

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Longtime Fool contributor Rick Munarriz owns shares of SodaStream. The Motley Fool recommends and owns shares of 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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