SodaStream International (SODA) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified SodaStream International ( SODA) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified SodaStream International as such a stock due to the following factors:

  • SODA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.5 million.
  • SODA has traded 1.2 million shares today.
  • SODA traded in a range 211.5% of the normal price range with a price range of $3.37.
  • SODA traded below its daily resistance level (quality: 92 days, meaning that the stock is crossing a resistance level set by the last 92 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on SODA:

SodaStream International Ltd. engages in the development, manufacture, and sale of home beverage carbonation systems that enable consumers to transform ordinary tap water instantly into carbonated soft drinks and sparkling water. SODA has a PE ratio of 26.8. Currently there are 3 analysts that rate SodaStream International a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for SodaStream International has been 1.2 million shares per day over the past 30 days. SodaStream International has a market cap of $1.4 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.25 and a short float of 54.4% with 11.89 days to cover. Shares are up 45.9% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SodaStream International as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • SODA's revenue growth has slightly outpaced the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 28.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SODASTREAM INTERNATIONAL LTD has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SODASTREAM INTERNATIONAL LTD increased its bottom line by earning $2.09 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $2.09).
  • The gross profit margin for SODASTREAM INTERNATIONAL LTD is rather high; currently it is at 57.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.71% is above that of the industry average.
  • Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 70.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • SODA's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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