by Travis Johnson, Stock Gumshoe | June 20, 2014 11:25 pm
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Source URL: https://www.stockgumshoe.com/2014/06/soda-brazil-and-royalties/
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SODA probably is making money on the refills. Carbon gas cartridge fills can hardly be worth $15. So it is an example of give away the razor (or the printer) and sell the blades (or the color cartridges.)
The stock is quite controversial because it manufacturers its machines in the West Bank
(occupied territory) as well as elsewhere. While local Palestinians like the jobs they get (and Israel likes the cheaper labor), the US Presbyterian Church thinks we should boycott SODA. Are you a member of the Kirk? I hope not.
Don’t get suckered into the ‘occupied territory ‘ thing. It’s propaganda. The ‘west bank ‘ was never formally part of any country, and numerous legit legal investigations reveal that, as such, it cannot be legally called ‘occupied ‘. Do your own research -Disputed,certainly but ‘occupied ‘not.
I have been following SODA now for over a year (during the stocks’ meteroic rise last Winter/Spring on strong Walmart sales and buyout rumors – from $30’s to $70’s). In that time since I have seen a company with a market cap around and now under $1B invest in a superbowl ad, sign up Scarlett Johansson as a global brand ambassador, expand partnerships with Samsung/KitchenAid/Kraft and others, expand their US retail doors presence increase over 25% (from 15,000 to 19,000), invest in a new warehouse which is now operational, continue to grow revenue in the double digits (with ealthy margins) in Europe and; through all this watch the stock fall back to the mid $30’s! If this isn’t that one of thise rare value buying themes, folks, I don’t know what is. I’m with Travis on this one. For disclosure purpose, I got in around $40 and will keep dollar cost averaging in through what will undoubtedly be a strong 2nd Qtr YOY in the US thanks to a huge 1,600 store 20 foot display at Walmart that was not there last year. Clearly there is high short interest over 30% and these folks are betting SODA is a fad and that without a Pepsi or Starbucks backing will go away. I heard similar theories re: GMCR in 2012 when they were heading towards $20 (they are over $120 now). You irregulars know the market moves often in ways that are out of touch with reality and fundamentals and can be rgged with emotion; but usually, the right side of the trade eventually catches up. The short sided view are having fun now, but the wiser long terms folks that patiently understand the business model and economic opportunity are having fun watching a small company execute and fail and learn and grow. Enjoy the ride and happy investing to all.
FYI, Karim Rahemtulla of Wall Street Daily is out with a public and pretty thin recommendation of Altius today as a royalty investment. For whatever that’s worth. Doesn’t seem to be moving the stock, nor should it, I expect Altius will continue to more largely on broad commodity sentiment and iron ore and Alderon news until they report their first full quarter as a profitable royalty company, which should be in mid-September. There was also a Motley Fool article on Altius and other royalty companies here today that was pretty positive, though not entirely accurate (Altius doesn’t have a 3% royalty on Voisey’s Bay, they own 10% of a limited partnership that owns that 3% royalty)
They should report their fiscal year results in about two weeks, so there may be news or movement the… but the royalty deal only closed last month so we may not have much data from that yet — guidance on cash flow from the royalties from Altius would be helpful next time they report, we’ll see if we get it.
Hi Travis, have you considered late July, Aug or Dec calls on SODA?
Travis
Any opinion on EBR? Current SP is 15% of its book value and price/operating cash flow ratio is just over 1 per Graham investor letter. Thanks
http://www.fool.com/investing/general/2014/07/08/sodastream-has-major-problems-should-investors-be.aspx
Not a huge fan of ‘fool.com’ but what do you folks think about the US market penetration?