The Story Behind Sodastream International Ltd (SODA)’s Recent Volatility

Looking ahead

SodaStream will report its quarterly earnings on August 5. As usual, the earnings release will provide insight into the company’s growth, profitability, and progress towards its long-term goals. Additionally, it is important to remain focused on the growth rates of the company’s products, particularly the consumable syrups and gas refills, to judge the ongoing adoption and use of Sodastream International Ltd (NASDAQ:SODA) systems.

Additionally, the competitive environment remains the primary risk to SodaStream’s goal of more than doubling its revenue by 2016. Each partnership that SodaStream enters into helps to solidify the company’s first-mover advantage and continue to widen its moat; the KitchenAid partnership is yet another example of this. Meanwhile, competition has already started to trickle into the market from kitchen appliance manufacturers such as Cuisinart. Adoption of competing platforms like Cuisnart’s or development of a home beverage system from PepsiCo, Inc. (NYSE:PEP) , the company rumored to have been interested in purchasing Sodastream International Ltd (NASDAQ:SODA)’s home carbonation technology, are important to watch carefully in the coming months. While Pepsi did not buy SodaStream, it is certainly possible that the company could invest its tremendous resources in the development of a competing home carbonation platform.

Invest in what you know

Not sure whether shares of Sodastream International Ltd (NASDAQ:SODA) deserve a place in your portfolio? SodaStream presents an excellent opportunity to take Peter Lynch’s famous advice to “invest in what you know.” Try the product for yourself! SodaStream holds free demonstrations at many of its retail outlets, and soda makers can be purchased for less than $100.

Meanwhile, the long-term investment thesis for Sodastream International Ltd (NASDAQ:SODA) is completely intact. The recent decline in share price simply gives investors the opportunity to add shares at a reasonable price point. While it is certainly possible that a lower share price may be available later in the year, I firmly believe that much higher share prices await investors in the future.

The article The Story Behind SodaStream’s Recent Volatility originally appeared on Fool.com.

Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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