SodaStream reported its third-quarter results on October 30 and, as evidenced by it's 10% decline since earnings, Wall Street was not impressed. This pessimism stems from worries over the company's strength in the United States in regards to slowing growth in flavor and soda machine sales. As mentioned in a previous post, the slowing flavoring sales seems to be a function of poor inventory management by retailers and soda machine weakness looks to be a matter of cyclicality due to a lull before the holidays.
While Wall Street seems to be discounting the future success of SodaStream, I feel there's at least six compelling reasons this is a great long-term holding for my personal portfolio.
- The carbonated beverage industry is slow moving and is ready to be disrupted.
- SodaStream's razor-and-blade model is advantageous.
- Health-conscious and environmentally friendly consumers will driver further growth..
- SodaStream's rebel image compared to traditional brands is a powerful selling force.
- When SodaStream completes its new manufacturing facility margins, profitability should increase.
- The company trades at a large discount to beverage giants given growth.
These six factors combined led to the increased stake in SodaStream and should contribute to continued success at the company going forward. While SodaStream is a good fit for my personal portfolio, always be sure a potential investment aligns with your individual needs and do your own research before making an investment decision.
Blake Bos 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.