There's a new pop star in town.
There's a lot to like about the company. It makes a home-brewing system for carbonated beverages at the same $100 to $200 price points as Green Mountain Coffee's
SodaStream is similar to Green Mountain, beyond the price points of the initial investments. They both provide consumers with home-based convenience and cost savings. They each also provide over 100 flavors to choose from. They operate under the same kind of razor and blades model, where companies cash in on the perpetual refills at higher margins than the initial sale.
However, there are also some major differences that aren't exactly flattering to SodaStream.
You're no Keurig, SodaStream
For starters, operating a SodaStream isn't as easy as inserting a K-Cup into a Keurig brewer and hitting a single button.
The SodaStream process begins with filling a canister with water, and blasting it with a refillable CO2 cylinder to carbonate the water. The canister then needs to be unscrewed where a potentially messy spill of flavored syrup follows. The cap is placed back on the canister, where the ingredients are shaken before being poured out.
In other words, the process isn't as easy as Keurig -- and sadly not as seamless as lifting the tab on a can of soda.
Keurig compares well against the cost and inconvenience of shelling out nearly $2 for a cup of java at Starbucks
We also haven't touched on the cumbersome practice of having to trek out with your refillable carbon-dioxide cylinder to Bed Bath & Beyond
Cramer vs. Cramer
It's under this backdrop that Jim Cramer invited SodaStream CEO Daniel Birnbaum to appear on Mad Money last week.
Birnbaum's a sharp guy. He's a Harvard MBA and was running Nike's operations in Israel before heading up Israeli-based SodaStream.
However, Cramer teased his audience by pointing out how SodaStream can be the next Green Mountain or Monster energy drink parent Hansen Natural
The first problem here is that assuming that any other company can replicate a similar company's torrid run ignores the starting line. Green Mountain and Hansen were obscure microcaps before beginning their defining runs to become the $4 billion companies that they are today.
SodaStream is already a celebrity. With 18.4 million shares outstanding after the offering, it's already a nearly $700 million company. If the shares appreciate by greater than 1,000%, it will be approaching a market cap similar to Hansen and Green Mountain combined.
Fizz goes flat
There may still be some pop to SodaStream. The eco-friendly message is real, since there aren't any bottles or cans to discard and potentially recycle. Fresh flavors also offer a healthier alternative to the calorie-laden brands that are spruced up with high fructose corn syrup.
SodaStream's also faring well in some markets outside of the United States. Birnbaum claims that his company has 20% market penetration in Sweden.
Unfortunately, SodaStream will need to earn even its current market cap. Revenue grew at a 10.5% annualized clip over the three previous years, turning profitable in 2008. It earned $9.7 million on $142.8 million in revenue last year. That isn't a lot for a company valued at nearly $700 million now.
Things are heating up, though. Revenue popped 50% higher through the first half of the year. I'm not entirely sold on the moat -- since no one's going to patent soda syrup and the value message may be lost on folks who can buy Cott's
The company's first quarterly report as a public company will be at month's end.
Let's see if the shares haven't gone flat before then.
What's the best or worst advice that you ever heard out of Cramer? Share your thoughts in the comment box below.
Green Mountain Coffee Roasters and Hansen Natural are Motley Fool Rule Breakers choices. Bed Bath & Beyond, Nike, and Starbucks are Motley Fool Stock Advisor selections. 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.
Longtime Fool contributor Rick Munarriz is a fan of diet soft drinks and he's weighing the decision on actually buying a SodaStream system. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.