Monday, November 8, 2010

Hot IPO - SodaStream (SODA)

Looks like the hours long selloff is almost erased... thankfully, this reign of bears (all few hours of it) appears to be stopped.  Their cockiness is astounding after 5 hours of "wins".... I'm hearing things like "I see daylight... maybe... but my eye is swollen shut from repeated battery."  What arrogance.

A name that crossed my radar today is SodaStream with the cute ticker SODA.  Never heard of it until all the clucking today about it is the next Hansens (HANS) [which for those who have been around for more than 2 years, was the Netflix of beverages in 'the day']   Or for those who have been introduced to the "non stop winning nature" of stock markets more recently, it can be loosely compared to Green Mountain Roasters (GMCR).... whatever the case just find a hot stock that had a huge run in the past decade that deals with beverages and do a comparison to justify buying at any price. It IPO'd last week to great success, with a price of $20 and opening day surge of 21% to $24.12.  But it hasn't stopped there.  It is up another 40% in the 3 days since (as I type) but was as high as 60%ish earlier today.


Ironically...speaking of bubbles...that's what SodaStream makes!  In the privacy of your own home.... anyone can be their own Bernanke or Greenspan.

  • Sales at SodaStream, whose soda machines transform tap water into sparkling water and carbonated soft drinks, increased 50 percent to $93.4 million in the six months ended June, the filing showed. Profit rose almost ninefold to $5.67 million.

To be fair the company is growing nicely, and even has a solid profit - all perfect ingredients to run the stock up 50% from IPO.  Wait, that's already been accomplished.  I suppose we're going for 150-250% in the current environment.  Valuation?  Forgeddaboudit!

Renaissance Capital, which tracks IPO had this to say about the company.

Headquartered in Israel, SodaStream International (SODA) is the world's leading provider of home carbonation systems, which allow customers to make their own sparkling water and all-natural soda. The company offers soda makers ranging from $79 to $199, as well as consumable products, such as CO2 refills, reusable bottles, and over 100 added flavors including cola, root beer, grapefruit and lemonade. With an average household penetration of 5% to 15% in its established Western European markets, SodaStream is now turning its focus to the US, where it recently began a nationwide launch at retailers such as Bed Bath & Beyond (BBBY), Macy's (M) and Crate & Barrel.

The major risk to SodaStream's vision of transforming the $234 billion global carbonated beverage industry is the resistance it could face from both retailers and consumers to changes in the status quo. For example, a handful of US retailers have declined to participate in SodaStream's cylinder exchange program, which allows customers to turn in their empty CO2 cylinders in exchange for full ones, paying only the price of the CO2. In addition, the average US consumer may be unwilling to make the switch from convenient store purchasing to a do-it-yourself approach, particularly if the cost savings for basic cola is likely to be marginal at best.

The knight master of bubble creation had the CEO on his show; see video below.

If the stars align for SodaStream, Cramer said Wednesday, this beverage company could be the next Hansen Natural, or maybe even Green Mountain Coffee Roasters, delivering near four-digit returns or greater for investors who get in on the ground floor.

Sodastream makes blender-sized soda makers, sold at Williams-Sonoma and Bed Bath & Beyond, that turn water into seltzer. In addition to the carbon dioxide refills needed to run the machine, SodaStream also sells more than 100 mix flavors. The device saves you money on store-bought soda—one $4 mix bottle makes 12 liters, or 33 cans, of soda—it’s environment-friendly, and the flavors carry two-thirds fewer calories than the leading soft-drink brands.

Sure, SodaStream might see the meteoric growth of Hansen which soared nearly 1,000 percent between 2004 and mid-2006, or Green Mountain which saw huge gains of 1,173 percent after acquiring single-cup coffee brewer Keurig in May 2006 up until Sept. 30 of this year. But then again, this company could go the way of Jarden, maker of the Jimmy Buffett Margaritaville frozen-drink maker, a stock that “hasn’t done a lot in a long time,” Cramer said.

That’s why he didn’t want investors rushing in just yet. SodaStream IPO’d on Wednesday, opening at $24.75, or 24 percent higher than the $20 offering price. But a successful public offering doesn’t necessarily make for a successful public stock. To do that, the company will in the very least need to find the same success it’s had in Europe here in the States as well.


You know things are out of control when even Cramer is cautious on a stock, and it ramps past his guidance. ;)

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