Happy Friday, all — Irregulars have already seen a few “members only” articles this week, from Dr. KSS’ new posting to my update on goings-on with Ligand, so I think we’ll probably be a bit on the brief side with the Friday File today… let’s see if I can stick with that prediction.
Things are fairly slow in my portfolio this week, but I’ve been considering adding to a few positions where pricing seems reasonable and the future’s looking a bit brighter — chief among those is probably SodaStream (SODA), which I did a small chunk to today as it dipped under $36.50 (they’ve been showing signs of life in their US growth again, including a big promotion at Walmart, though we won’t really know details for another six weeks as we await another quarterly report), and I’ve also been looking at Softbank some more (haven’t bought any yet).
SODA, for those new to the group, is the maker of home carbonation machines and — perhaps more importantly — they boast a huge global network of locations where the CO2 cartridges used to fuel these machines can be recharged and recycled (buying a new cartridge costs about $30, if you bring back the old one for recycling you get a new one — a “refill” — for $15). They also sell the flavors that folks add to their carbonated water to create regular or diet sodas in a hundred or so different varieties, most are a bit better for you than conventional soda, having fewer calories and actual sugar, though they are different from the Cokes and Pepsis you’re used to and if it wasn’t for the kids we probably wouldn’t get any of the flavors — I just like the bubbly water.
As an investment, the company is basically a “mini blue chip” with a large and established brand and recurring revenue business in Europe… but they’ve used the cash from that “blue chip” business to expand, pouring cash into building up their distribution networks in other countries in an effort to grow. The most notable market is the US, though they’re growing quickly in parts of Asia as well, and their big investment in building a US business up to meaningful scale has used up the free cash flow from their steady, slow-growth European operation. The stock fell from its heights of about a year ...