This article is part of our Rising Stars Portfolio series.
My Rising Stars portfolio embraces companies that pursue sustainable business practices, renewable resources, and social responsibility. Carbonated drinks might not seem like a natural fit with these lofty ideals, but one company I'm watching might manage to cater to consumers' collective sweet tooth while still making the world a sweeter place.
Environmentally aware consumers already know about the evils of wastefulness and the particular perils of plastic. Shareholder activist As You Sow recently urged giants Coke
SodaStream sounds like an exciting stock idea. Still, I'm haunted by another upstart soft drink play that disappointed investors' fizzy expectations. Jones Soda once enjoyed major cool cred -- but topped out at nearly $30 in April 2007. Now it's just a sad penny stock. Hansen Natural
It's cheeky and bold to go for a hefty piece of the market dominated by beverage giants like Coke, Pepsi, and Dr. Pepper/Snapple
SodaStream trades at a nosebleed 74 times trailing earnings. By comparison, Pepsi's trading at just 19 times earnings, and Coke's price-to-earnings ratio is a measly 13. If SodaStream's current popularity and growth potential simply reflect just another passing fad, investors who buy in now have a lot to lose.
Bottom line: SodaStream's on my watch list because of its business's compelling elements, including its urge to save the world from plastic bottles. But for now, I'm staying on the sidelines. As long as the price is this fizzy, this stock is risky. Share your thoughts in the comments box below.
- Look deeper into SodaStream shares' recent pop.
- Will selling through Best Buy give SodaStream a jolt?
- Add SodaStream to your Fool watchlist.
This article is part of our Rising Stars Portfolio series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).