All posts by jimmybob

You ever hear of SODA(SodaStream International)??

We have written about this company a few times over the past month.(Here and here). SODA (SodaStream) was a $70+ stock in the summer, and has succumb to the growth stock syndrome, where skeptics and short sellers rip the stock apart.

It seems SODA(SodaStream) has found its short term bottom, and is ready to break to the upside. Here is why:

1. It's a great product. I remember early last year, standing at the line at the supermarket, listening to some ladies discuss what was on their Netflix Queue. It was then that i knew Netflix had hit the mainstream. Have you ever tried SodaStream? Ever saw the product. Ever spoke to someone who has used it... well it isn't a "has"... because they use it everyday. The last hurdle for SodaStream in the U.S. is Walmart. But they won't need that to continue growing.

Where you can get SodaStream:

2. Soft Drinks account for $57 Billion in revenues in the  U.S. in 2010.  For 2010 SodaStream did just $213.2 million in revenues and expects continued growth for 2011. Growth? There is quite a bit of opportunity to grow in just the U.S. , considering a large percentage of their business is international right now. Anyone stop by their local Target or BestBuy and see a SodaStream Demo? Thats right, reps doing in store demo's. Last time I saw that from a beverage machine, was a few years back, and it was the Keurig. Nice read on that here. 

3. The Short interest in the stock is 34.1%. It almost seems like folks are so set on making their trade "right", that they have shorted the snot out of it to make sure it happens. Well it seems like their short term success, will be our short term glory soon. It would take over 7 days for folks to cover their shorts. Just needs a spark.

4. SodaStream announced a partnership with Kraft, where some of Krafts top brands like Country Time Lemonade and Crystal Light will be available for the SodaStream in-home carbonation system. I would say it's a very good sign, when a company like Kraft takes interest in your products. Well it's more then taking interest, when they make them available for use on your own product.

5. As of the close on Feb 13th, 2012, SODA (SodaStreams) Marketcap was $728 million. A paltry number for a company that grew over 20% YOY, has zero debt, and is just getting it's footing in major markets. Over the past week, there has been chatter of Kraft acquiring a stake in SODA(SodaStream). It makes sense when it would take $1 billion or so to gain a product that will help drive sales in other areas.

6. It looks like SodaStream did very well this holiday season. If the website traffic was any indication, Quarter 4 should be very nice!

 

 

 

 

 

 

With everyone worried about the environment, SodaStreams technology is a huge "green" product, as people just reuse their bottles, as opposed to recycling (hopefully) or throwing out their Coke or Pepsi bottle.

Bottom line, SodaStream seems to be a very attractive company, at a rock bottom price. There is quite a few ingredients that could lead to a 30%+ move over the next few weeks. A Walmart Deal, Kraft stake or buyout, or Huge company Earnings report on Feb 29th. Either way, we think she heads higher.

 

Disclosure: We currently hold the FEB $45 Calls and March 50 and 55 Calls

LNKD(LinkedIn Corp) – From Garbage to Growth Stock, Go figure…

 

 

It was just this past spring when LNKD (LinkedIn Corp) had it's IPO, and soared over 100% from it's offering price of $45s. It was a spectacular day, and LNKD(LinkedIn Corp) enjoyed a few weeks of volatile trade above and below the $100 mark. Of course there were many skeptics, who thought LNKD(LinkedIn Corp) current fundamentals didnt warrant the lofty share price. Actually, I think there was a line forming for those waiting to borrow shares to short. Over the course of the next few months, LNKD (LinkedIN Corp) continued to trade in a wide range, from $60 to $100. The issue with LNKD(LinkedIn Corp) was with it's valuation, as the company only generated $93 million in revenue as per it's initial filing, but had a market cap in the Billions. Couple that with the secondary offering of 8.75 million shares in November, and you have a stock poised for a sell-off... which it did. As with any stock that has seen it's share price fall, many LNKD(LinkedIn Corp) shares were in the hands of short sellers. Which brings us to last week.

LNKD(LinkedIn Corp) reporting earnings that easily surpassed analysts estimates. It turns out the secondary offering that is usually a red flag, was actually a good thing. The company is growing so fast, they need money to continue the growth.

And that is the key word here... GROWTH. LNKD(LinkedIn Corp) currently has a P/E ratio of 769! One look at that number, and the only word that comes to most peoples minds is "OverValued". We see the LNKD(LinkedIn Corp) P/E ratio and one company comes to our mind... "SalesForce.com".

The same company that analysts said was a bloated stock with weak fundamentals. The same stock that Analysts continued to give lower price targets even as the stock soared to new highs. As with many sectors and companies, there are always parallels that can be made. And one thing for sure, is we think there will be many parallels made between CRM and LNKD in the coming months. And you heard it here first at OptionMillionaires.

We fully expect LNKD(LinkedIn Corp) to trade above $100 in the very near term.

Disclosure: We are holding $92.50 and $95 Feb 18th calls.

GOOG (GOOGLE)

People always try the short cut. Its the lazy way. The short cut was buying LNKD SINA RENN and other stocks based on the Facebook IPO.

 

If Facebook is valued possibly at 100 billion, then how can you say Google is only worth 157 billion? Make no sense, and thats why she goes $640+ short term as folks start chasing the trade(Right now she is at $610)

We bought the $625 FEB 10th weekly calls this morning at .55.

 

Happy Trading!

ICE (Intercontinental Exchange)

What is the best indicator of  future performance??? Past performance? Well if it was that easy , this site would be called OptionBillionaires. But what we can say, is that a stocks history can be used as a tool to help gauge future results.  Take ICE (Intercontinental Exchange) for example. ICE has reported earnings that have beaten EPS estimates for the last 7 Quarters, revenues have also been growing, yet the stock has traded in a range from $102 to $135. We think this earnings cycle will break that trend.

 

Like we wrote about on CME (CME Group), buying options in a stock thats 'cold', can yield amazing returns as it gets 'hot'. We think ICE is ready to melt the charts, and break the trading range with it's earnings release tomorrow. This is the difference maker, and the one that set the stock on fire a few years back on the new. Check it out here. Thats the money maker.

I guess time will tell, but if history is any indication, we will be in for a very fun wednesday.

 

Disclosure: We do own $130 FEB 18th calls and March $135 calls.

 

 

SODA (SODASTREAM)

SODA keeps breaking out to the upside today, and  we still think $45+ is in the cards short term. January and February continues to be the months of the OVERSOLD Growth stock recovery, and SODA sure fits the bill. With stocks like GMCR and NFLX coming back from the dead, it only seems fitting that another stock, with huge growth, starts coming back from its 50% haircut.

It seems the close over $42 sets it up for continued upward momentum.