"Under the Radar" uncovers little-known companies worthy of investors' consideration. Check in at 5 every morning to find out about stocks that tend to beat their bigger brethren.
BOSTON ( TheStreet) -- I recommended that investors purchase shares of discount soda-seller Cott Corp. (COTT) on Aug. 4. Since that recommendation, Cott's shares have jumped 63%. So far this year, Cott has surged more than seven-fold. That rally is fundamentally justified and has further to go.
Cott, which makes RC cola and the Red Rain energy drink, swung to a third-quarter profit of $14 million, or 18 cents a share, from a loss of $88 million, or $1.25 a share, a year earlier. Revenue declined 4% to $405 million, but profit spreads improved. Cott's gross margin rose from 16% to 19% and its operating margin climbed from 2% to 7%.
Recent operating success has strengthened the company's balance sheet. Cott now holds $19 million of cash reserves, translating to an adequate quick ratio of 1. And a debt-to-equity ratio of 0.8 indicates reasonable leverage. Still, we give Cott a financial-strength score of just 2.1 out of 10 due to inconsistent performance.In 2008, Cott was suffering under restructuring and asset-impairment charges. In the prior year's third-quarter, the company posted an operating loss of $91 million due to impairments. Investors abandoned the stock, questioning not only its investment merits, but its long-term viability. A fire-sale caused Cott to lose 82% of its market value over the course of a year. The stock bottomed at 66 cents on Oct. 10, 2008. The shares now trade around $9. So if you possessed the insight to buy at the bottom, you'd be up 1,271% now, a respectable return over a one-year period.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV