On the stock market, overhyped companies get exactly one chance to make it. If they don’t deliver, investors bail out, the stock crashes, and the investment pundits find something else to talk about. And yet… SodaStream was hyped in 2013, condemned in 2014, and all but forgotten in 2015. Then, a few significant things happened, including the catastrophic failure of Keurig Green Mountain’s (GMCR) Keurig Cold machine, which many people believed would cut deeply into SodaStream’s sales by allowing people to make Coca-Cola (KO) products at home. Also, in May of 2016, SodaStream announced that it would sell a unique concentrate that could be mixed with its carbonated water to make beer.
The beer announcement refocused a lot of attention on SODA stock, but the company’s revived earnings and revenue would certainly have done that before much longer anyway. Not only did SODA shares rise by 150% in 2016, but the company’s profit margin expanded from 2% to 7%. Even now, the trailing P/E is 26.42—almost exactly the same as the broad market. With SodaStream growing so much faster, that’s a little nuts.
And check out the beautiful J-curve forming in that chart! (Sorry—once a year or so I make a reference to the 100% non-predictive precepts of technical analysis.)
Chart courtesy of www.stockcharts.com