2-Star Stocks Poised to Plunge: SodaStream?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, home beverage carbonation system specialist SodaStream International (NAS: SODA) has received a distressing two-star ranking.

With that in mind, let's take a closer look at SodaStream's business and see what CAPS investors are saying about the stock right now.

SodaStream facts

Headquarters (Founded)Tel Aviv, Israel
Market Cap$645.1 million
IndustryHousehold appliances
Trailing-12-Month Revenue$281.8 million
ManagementCEO Daniel Birnbaum (since 2007)
CFO Daniel Erdreich (since 2007)
Trailing-12-Month Return on Equity22.4%
Cash/Debt$90.6 million / $232,000

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 20% of the 432 members who have rated SodaStream believe the stock will underperform the S&P 500 going forward. These bears include Jeffrey2012 and TarynOne.

A couple of months ago, Jeffrey2012 touched on SodaStream's seemingly unsustainable valuation: "Give me a break. Expensive fad company who faces increasingly difficult sales comps going forward."

In fact, SodaStream trades at a forward P/E of 24. That represents a clear premium to more conventional, dividend-paying soda plays like Coca-Cola (NYS: KO) (16), PepsiCo (NYS: PEP) (14), and Dr Pepper Snapple (NYS: DPS) (12).

CAPS member TarynOne elaborates on the SodaStream bear case:

From a consumer's perspective, this stock will eventually come down from it's honeymoon period. Apart from food/soda "hobbyists" that would happily pay up for the novelty of making your own soda drink, the average soda lover will soon realize that ready-made soda is the cheapest and easiest option. It may take some time for the novelty to wear off though because I must admit carbonating your own soda does sound pretty cool.

What do you think about SodaStream, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Interested in another easy way to trackSodaStream?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of SodaStream, Coca-Cola, and PepsiCo, as well as creating a diagonal call position in PepsiCo. The Fool owns shares of Coca-Cola and PepsiCo. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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