Strong On High Volume: SodaStream International (SODA)

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.

Trade-Ideas LLC identified SodaStream International ( SODA) as a strong on high relative volume 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 $5.8 million.
  • SODA has traded 158,629 shares today.
  • SODA is trading at 7.05 times the normal volume for the stock at this time of day.
  • SODA is trading at a new high 5.05% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SODA:

SodaStream International Ltd. develops, manufactures, and markets home beverage carbonation systems and related products. The company operates through four segments: The Americas; Western Europe; Asia-Pacific; and Central and Eastern Europe, Middle East, and Africa. SODA has a PE ratio of 22. Currently there are 2 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 430,200 shares per day over the past 30 days. SodaStream International has a market cap of $449.6 million and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.00 and a short float of 15.8% with 12.15 days to cover. Shares are up 7.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SodaStream International as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • SODA's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for SODASTREAM INTERNATIONAL LTD is rather high; currently it is at 56.61%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 6.62% is above that of the industry average.
  • SODASTREAM INTERNATIONAL LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SODASTREAM INTERNATIONAL LTD reported lower earnings of $0.57 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($1.26 versus $0.57).
  • Net operating cash flow has significantly decreased to $0.07 million or 97.58% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Household Durables industry and the overall market, SODASTREAM INTERNATIONAL LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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