This article is part of our Rising Stars Portfolio series.

Almost a year ago, I decided SodaStream (Nasdaq: SODA) shares were too pricy for my taste. Since then, the stock price has been slashed by more than half, so now I'm ready to buy some shares for the real-money, socially responsible portfolio I'm managing for Fool.com.

The business
SodaStream, which is headquartered in Israel, is trying to take some of the fizz out of traditional soft-drink companies such as Coca-Cola (NYSE: KO), PepsiCo (NYSE: PEP), and Dr Pepper Snapple (NYSE: DPS).

The SodaStream machines allow consumers to easily make their own fresh soda or sparkling water at home. The user-friendly machines fit easily on countertops and use a small carbon-dioxide tank and reusable bottles designed for the system.

Let's forgive SodaStream for the names it's slapped on some of its soda syrups, like "Dr. Pete" and "Fountain Mist," which appear to be its answers to the taste sensations of Dr Pepper and Mountain Dew. The company's given consumers a cheaper and more convenient alternative to the burdensome 12-packs, cases, and bottles they've traditionally schlepped home from grocery stores.

SodaStream wouldn't be a contender for this portfolio if it didn't have an environmentally friendly or socially responsible angle, so here it is: Making soda and sparkling water at home reduces the amount of waste from cans and bottles. As of the ticking counter on the SodaStream website, the company has "saved the world" from 1.76 billion bottles clogging up waste streams. Meanwhile, manufacturing throwaway plastic bottles uses a lot of energy and oil on top of the troubling elements of bottles that end up in landfills and highly ecologically inappropriate places, like the Great Pacific Garbage Patch.

Did I mention SodaStream provides a cheaper alternative to traditional soda from the soft-drink heavyweights? That means the systems will appeal to penny-pinchers as well as eco-conscious consumers. The company claims the equivalent of each can of its soda or liter of its sparkling water costs just a quarter, which is a major savings over soda purchased in stores, vending machines, and other venues.

The SodaStream machines and syrups are available in major U.S. outlets such as Target, Wal-Mart, Bed Bath & Beyond, and Costco, to name just a few.

Why I'm buying
SodaStream's stock has taken a major hit, but that gives us a much cheaper buying opportunity. Let's face it -- the company has great growth potential as more consumers catch on that making soda and sparkling water at home removes expense and heavy lifting out of their lives.

The shares are far reduced from their 52-week high of nearly $80; they currently trade at about $32. Last year, I balked at the fact that SodaStream shares were trading at 74 times trailing earnings, a huge premium to other soda purveyors. They now trade at a far more reasonable 20 times trailing earnings, and just 12 times forward earnings.

SodaStream's PEG ratio of 0.48 also signals an undervalued stock. This is a great bargain for a company that's not only increasing its profitability, but has also been increasing revenue at double-digit percentages for several years. In the past 12 months, SodaStream increased sales by 39.4% and increased per-share earnings by 55.1%.

Weirdly enough, SodaStream's shares have been slammed so badly that it actually looks like a better deal than many of its more venerated rivals. Coke's trading at 16 times forward earnings and sports a PEG ratio of 2.30. Pepsi (which also has a space in this portfolio) is currently trading at 15 times forward earnings and has a PEG ratio of 3.42. Dr Pepper Snapple trades at 13 times forward earnings and sports a PEG ratio 2.17.

Remember, for all that companies like Coke and Pepsi are venerated, they're also very mature. They've become so ubiquitous that it's difficult for them to achieve the kind of growth that newer companies can.

Another upstart, Monster Beverage (Nasdaq: MNST), also comes up with a hefty price tag; it trades at 29 times forward earnings and has a PEG ratio of 2.37. SodaStream's looking like the best bargain out there.

And now, the risks
SodaStream obviously has extremely mature and well-heeled competition; some people would come to blows over whether they prefer Coke or Pepsi, after all. It's difficult for upstarts to find the same type of loyalty.

One of SodaStream's most important growth angles is attacking the U.S. market for soft drinks. This has required different skills than it used to market its product in Europe.

And when you want to consider how difficult it is to face off against entrenched competition, see the fate of Jones Soda. It's just a sad penny stock now, and it hasn't reported a profitable year since 2006.

Another challenge SodaStream faces is whether American consumers will be willing to exchange their used CO2 cylinders for filled ones, and the company also has to work to establish relationships with strong retailers that are willing to aid in the reverse logistics for that process.

The company's Israeli headquarters adds some risk for this company, too; it's smack-dab in a very challenging geopolitical region.

Last but not least, I wouldn't describe SodaStream as a company with an impenetrable moat, although its brand appears to be catching on with plenty of people through word of mouth and advertising. With any product like this, though, investors must be aware that popularity could prove faddish instead of long-lasting.

The Foolish bottom line
SodaStream is squaring off against challenges to change the way consumers think about soda, but it also faces an exciting opportunity to give Americans a cheaper, more environmentally friendly way to quench their thirst. And now, the price is right, too.

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